Value investing is the strategy of buying securities that appear cheaper than their estimated intrinsic value.
Value investors typically study financial statements, cash flows, assets, earnings, competitive advantages, and other factors to estimate what a company may be worth. They then look for a difference between that estimate and the market price, often called a margin of safety.
The approach is strongly associated with Benjamin Graham and David Dodd, whose 1934 book Security Analysis helped formalize fundamental analysis. Warren Buffett later became one of its best-known practitioners, although his approach also emphasizes business quality and long-term economics.
A low price alone does not prove that a stock is undervalued. The company may have declining earnings, excessive debt, or a damaged business model. Value investing therefore involves both valuation judgment and the risk that the market price remains low.