The general theme of value investing is trying to purchase securities that are undervalued by the market with the expectation that they will appreciate in value at a future date. In other words, value stocks are stocks that are temporarily out of favor with investors, and their market price is low considering the value of company assets and prior historical performance.
However, this intrinsic value is not something that always has a consensus opinion. Investment professionals use numerous techniques and strategies for estimating the intrinsic value of an investment. In theory, an investment that is currently priced below its intrinsic value will increase until it reaches that value.
A company's stock may also be considered a value stock when major institutional investors, such as retirement funds, fail to invest in the company because the institutions' need to purchase large blocks of stock would result in owning too large a share of the company. As such, the company is fundamentally sound but simply not a good match at present for larger investors.
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