Intrinsic Value

Fundamental analysis introduces the concept of intrinsic value. Intrinsic value is the "real" value of a security. This implies that market prices are not true reflections of a stock's worth. This is where fundamental analysis comes in. For example, Trader X is following stock ABC, which is trading at $25. After doing his analysis however, he finds that stock ABC has an estimated value of $30, its 'intrinsic' value.