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Today's Bonus Story These 3 Stocks Trade at Discounts the Market Won't Ignore ForeverAuthored by Dan Schmidt. Published: 1/5/2026. 
Quick Look - 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% — the third straight year above historical norms, though 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) rose again on the first trading day. If you’ve ridden the AI rally since the market bottomed in 2022, 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 the year trading at 26x forward earnings, a stark elevation above its 20-year average of 16x forward earnings. When valuations are this high, investors become ravenous for earnings growth, and high-multiple stocks can fall out of favor quickly if growth slows even a little. If rates remain elevated, 2026 could be the year value investing stages a comeback. While President Trump's official salary is $400,000 per year... his tax returns reveal he's been collecting up to $250,000 PER MONTH from one hidden source. Until recently, most Americans couldn't touch the type of investment that makes up this investment. But thanks to Executive Order 14330, that just changed. If you love investing in disruptive new companies... Discover how to invest in the fund Trump uses to collect this income >> Today, we’ll look at ways to de-risk a portfolio by investing in stocks that enter the new year undervalued and overlooked. Each company discussed here trades at a substantial valuation discount to its industry average, but fundamental and technical tailwinds suggest those discounts may not persist for much longer. 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. A lost decade is an investor’s worst nightmare; CMCSA is about five months from completing that milestone, trading at roughly the same price it was in May 2016. Now, customers are showing signs of cord-cutting fatigue as streamers raise prices and enter costly disputes with major networks. Meanwhile, Comcast has quietly built a sturdy balance sheet with a variety of revenue streams, and its forward price-to-earnings (P/E) ratio of 6.84 is well below both the communications industry average (16.5) and those of major competitors like The Walt Disney Co. (NYSE: DIS) and AT&T Inc. (NYSE: T). 
Comcast’s broadband business is a steady, high-margin cash-flow machine. Despite Connectivity and Platforms revenue slowing 1.4% year-over-year (YOY) in Q3 2025, the residential and business segments’ EBITDA margins were 37% and 56%, respectively. The advertising business also expects a boost in 2026 as NBCUniversal holds the 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, continuing to support its 4.4% dividend. Comcast’s value story might not remain a secret much longer: the stock is up nearly 10% over the past 30 days, and some technical signals hint at further upside. Micron: An Essential AI Stock Trading at a Deep Discount How can a stock that just delivered about a 200% return in 2025 still be considered undervalued? Despite its parabolic year, Micron Technology Inc. (NASDAQ: MU) remains relatively undervalued among AI-related names, trading at roughly 29x forward earnings while parts of the tech sector sit near 75x. A P/E of 29 isn’t exactly cheap relative to the broader market, but it looks attractive for a company generating 57% YOY quarterly revenue growth, 57% gross margins, and that keeps raising guidance each conference call. 
Memory chips are high-margin businesses, and Micron’s management says it is struggling to keep up with insatiable demand from data centers. The chart shows a healthy stock in a strong uptrend with support along the 50-day simple moving average (SMA). This aligns with the TradeSmith Health indicator, which measures a trend’s viability; in this case, MU shares are in the Green Zone, indicating a strong uptrend with healthy pullbacks. Pfizer: Fueling Pipeline Innovation Through Acquisitions Shares of healthcare giant Pfizer Inc. (NYSE: PFE) have struggled 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 thanks to obesity drugs such as Mounjaro, but Pfizer is now trading near historical lows in valuation (about 8.4x forward earnings) and is far cheaper than most large-cap peers in the pharmaceutical sector. The company’s Seagen acquisition is also beginning to pay off in the oncology division, adding more than $6 billion in revenue since the deal closed in 2023. 
Despite a slow pivot into the obesity drug market, Pfizer now has a meaningful pipeline after acquiring two smaller drugmakers with oral and injectable treatment options. The market has largely written Pfizer off in this space, which helps explain the valuation gap. Low expectations can create opportunities: the stock hasn’t priced in successful inroads into the GLP-1 market. Additionally, Pfizer is a defensive option thanks to its low valuation and its long history of dividend growth.
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