In stock investing, low-priced doesn’t always mean cheap. Stocks can be considered cheap when the market wrongly undervalues them, or prices them below their actual values. Eventually the market realizes its error and prices such stocks correctly. However, if the underlying company doesn’t have a lot to offer investors, the market rightly prices their stocks low. Such low priced stocks are value traps that won’t appreciate until the underlying business picks up.
Prudent investors know how to identify value stocks from value traps. But if you do find an undervalued stock, it can be a great addition to your portfolio. Kroger (NYSE: KR), Tapestry (NYSE: TPR), and Bed Bath & Beyond (NASDAQ: BBBY) are all solid businesses trading at absurdly cheap valuations right now, and could be worth buying.