When a stock is undervalued, it typically means that its share price does not reflect its overall intrinsic value or earnings power. For some reason, the market has not discovered its value, at least as measured by some key indicators.
Generally and/or eventually the market does catch on and, after a period of sustained performance, the price goes higher. As an investor, the opportunity comes from getting on board before it does so you can ride that wave to higher returns.
One undervalued stock in particular that looks like a good buy right now is Alliance Data Systems (NYSE: ADS) .
For further details see:
Why You Should Buy This Undervalued Stock Before Everyone Else Does