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What Is a mid-Value Stock?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 06 November 2018
  • Copyright Protected:
    2003-2018
    Conjecture Corporation
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A mid-value stock is a term used to identify shares issued by a company that is considered to fall into the medium or mid-sized range for market capitalization, and that are currently trading for a little less than what experts consider the intrinsic value for those shares. Investors sometimes look for stock that fits this profile, since the level of risk taken on by investors is considered less than with stocks that are trading at par with their intrinsic value. This type of growth stock does carry some level of risk, making it necessary to consider more than simply the current trading price.

Determining whether a given stock issue can be classified as a large-value stock, small-value stock or a mid-value stock often involves looking closely at what is known as the price to book value ratio. The general idea is to compare the current asking price with the most recently assessed book value for those shares. In the case of a mid-value stock, that ratio would indicate that the shares are selling for less than the current book value, and that the shares are considered to be along the middle area of the market.

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Securing mid-value stock as part of the creation of a diversified portfolio is a good idea. Typically, shares of this type are somewhat consistent in market performance, meaning that dividends from the assets will be regular and within a steady range. Investors can use these types of shares as an anchor for the portfolio, helping to offset losses on riskier ventures. Since mid-value stock may be associated with companies in a wide range of industries, investors can further diversify by choosing options issued by businesses that are found in different sections of the marketplace. This further helps to insulate the portfolio from losses, since gains with some of the stocks in one sector will likely offset losses associated with stocks issued by businesses operating in a different industry.

Brokers can help investors identify mid-value stock options that are in line with the stated financial goals of those investors. When coupled with assets other than stock options, such as real estate, bonds and even trading in commodities, the mid-value stock can provide steady returns that serve the investor well for a number of years. As with any type of stock option, investors must monitor market movement and attempt to project what will happen with the shares in the future. This makes it easier to determine whether to hold onto the stock, attempt to secure additional shares, or to sell the stock before there is some drastic event that causes the intrinsic value of the shares to decrease considerably.

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