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These 3 Stocks Trade at Discounts the Market Won't Ignore Forever
Reported by Dan Schmidt. Originally Published: 1/5/2026.
Key Takeaways
- The S&P 500 posted another gain above 15% in 2025, but the market is now approaching historically concerning valuation levels.
- When valuations are elevated, slowing earnings growth is harshly punished, and investors often turn to value stocks for safety.
- These three large-cap stocks all trade well below their industry-average P/E ratios, which could help protect against market volatility in 2026.
The S&P 500 wrapped up 2025 with a total return of about 18% — its third straight year above historical norms, but below the gangbusters 25% returns of 2023 and 2024. AI euphoria remains the dominant market theme entering 2026, and the usual suspects like NVIDIA Corp. (NASDAQ: NVDA) and Alphabet Inc. (NASDAQ: GOOGL) climbed again on the first trading day. If you've ridden the AI rally since the 2022 market bottom, you're likely sitting on substantial gains and may feel compelled to diversify, especially if you have a tech-heavy allocation.
The S&P 500 is entering 2026 trading at about 26x forward earnings — well above its 20-year average of 16x. When valuations reach this level, investors become ravenous for earnings growth, and high-multiple stocks can fall out of favor quickly if growth eases. If rates remain elevated, 2026 could be the year value investing stages a comeback.
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Wall Street Legend Who Called 2022 Bear Issues New Warning
50-year Wall Street legend Marc Chaikin called the 2022 bear market, the 2023 bank failures, the 2020 crash, and the 2025 tariff tantrum – all in advance. In light of the recent volatility, he's now stepping forward to warn of a "violent market shift" headed straight for U.S. stocks in early 2026.
Below are three ways to de-risk a portfolio by adding stocks that start the year undervalued and overlooked. Each company discussed trades at a meaningful valuation discount to its industry peers, yet both fundamental and technical tailwinds suggest those discounts may not persist.
Comcast: Strong Balance Sheet and Sports Expansion Enhance Outlook
The Comcast Corp. (NASDAQ: CMCSA) was one of the biggest victims of the cord-cutting revolution, as customers fled expensive cable packages for a la carte streaming services.
Lost-decade concerns are real: CMCSA is about five months from marking a ten-year stretch and is trading near the same price it held in May 2016.
But signs of cord-cutting fatigue are emerging — streamers are raising prices and getting into costly disputes with major networks.
Meanwhile, Comcast has quietly built a solid balance sheet and diversified revenue streams. Its forward price-to-earnings (P/E) ratio of 6.84 sits well below the communications-industry average (16.5) and major competitors like The Walt Disney Co. (NYSE: DIS) and AT&T Inc. (NYSE: T).
Comcast's broadband business remains a steady, high-margin cash-flow engine. Although Connectivity and Platforms revenue slowed 1.4% year-over-year (YOY) in Q3 2025, EBITDA margins in the residential and business segments were 37% and 56%, respectively. Advertising should also get a lift in 2026: NBCUniversal holds rights to Super Bowl LX, the FIFA World Cup and the Winter Olympics in Italy.
The company generated $4.9 billion in free cash flow in Q3, which continues to support its 4.4% dividend. Comcast's value story may not remain a secret for long — the stock is up nearly 10% over the past 30 days, and several technical signals point to potential further upside.
Micron: An Essential AI Stock Trading at a Deep Discount
How can a stock that just posted a roughly 200% gain in a year still be considered undervalued?
Despite its parabolic 2025, Micron Technology Inc. (NASDAQ: MU) remains one of the more reasonably priced players in the AI supply chain, trading around 29x forward earnings while the broader tech sector sits near 75x.
A P/E of 29 isn't cheap versus the entire market, but it looks attractive for a company delivering 57% year-over-year quarterly revenue growth, roughly 57% gross margins, and repeatedly raising guidance.
Memory businesses tend to have high margins, and Micron's management has said the company is struggling to keep pace with insatiable data-center demand. The chart shows a healthy uptrend with support around the 50-day simple moving average (SMA). The TradeSmith Health indicator places MU shares in the Green Zone, signaling a strong trend with normal, healthy pullbacks.
Pfizer: Fueling Pipeline Innovation Through Acquisitions
Shares of healthcare giant Pfizer Inc. (NYSE: PFE) have languished since the COVID-19 pandemic receded; the stock is down more than 30% over the past five years.
Competitors like Eli Lilly and Co. (NYSE: LLY) have surged past Pfizer on the strength of obesity drugs such as Mounjaro. Pfizer now trades near historical valuation lows (about 8.4x forward earnings), making it much cheaper than most large-cap pharmaceutical peers.
The company's acquisition of Seagen is starting to pay off in oncology, adding more than $6 billion in revenue since the deal closed in 2023.
Though Pfizer moved slowly into the obesity-drug market, it now has a meaningful pipeline after acquiring two smaller drugmakers with oral and injectable candidates. The market appears to have largely written Pfizer off in this space, which helps explain the valuation gap. Low expectations can create opportunities — the stock hasn't priced in a successful push into the GLP-1 market. Combined with a history of dividend growth, Pfizer can also serve as a defensive holding at today's cheap valuation.
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