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This Week's Featured Article These 3 Stocks Trade at Discounts the Market Won't Ignore ForeverReported by Dan Schmidt. Date Posted: 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%, the third straight year above historical norms, though lower than the gangbusters 25% returns in 2023 and 2024. AI euphoria remains the dominant market trend entering 2026, and the usual suspects like NVIDIA Corp. (NASDAQ: NVDA) and Alphabet Inc. (NASDAQ: GOOGL) jumped again in the first trading session. 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 about 26x forward earnings, well above its 20-year average of roughly 16x. When valuations are this elevated, investors become ravenous for earnings growth, and high-multiple stocks can fall out of favor quickly if growth slows even slightly. If rates remain high, 2026 could be the year value investing stages a comeback. 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 long. Comcast: Strong Balance Sheet and Sports Expansion Enhance Outlook 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 every investor's nightmare, and CMCSA is about five months from marking that milestone—it's trading near the same price it was in May 2016. But now customers are showing cord-cutting fatigue as streamers raise prices and enter costly disputes with major networks. Meanwhile, Comcast has quietly built a sturdy balance sheet with diverse revenue streams; its forward price-to-earnings (P/E) ratio of 6.84 is far below the communications industry average (16.5) and well under 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 engine. Despite Connectivity and Platforms revenue slowing 1.4% year over year (YOY) in Q3 2025, the residential and business segments recorded EBITDA margins of 37% and 56%, respectively. The advertising business should also get a boost in 2026 as 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, supporting its 4.4% dividend. Comcast's value story may not be a secret much longer—the stock is up nearly 10% over the past 30 days, and several technical signals point to further upside. Micron: An Essential AI Stock Trading at a Deep Discount How can a stock that just wrapped up a 200% year still be undervalued? Despite its parabolic 2025 performance, Micron Technology Inc. (NASDAQ: MU) remains one of the more undervalued players tied to the AI boom, trading at about 29x earnings while the broader tech sector sits near 75x. A P/E ratio of 29 isn't exactly cheap versus the broader market, but it looks attractive for a company generating 57% YOY quarterly revenue growth, posting 57% gross margins, and regularly raising guidance. 
Memory businesses are high-margin, and Micron's management has said it is struggling to keep up with insatiable demand from data centers. The chart shows a healthy uptrend, with support along the 50-day simple moving average (SMA). This aligns with the TradeSmith Health indicator: MU shares are in the Green Zone, signaling a strong trend with orderly 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 sailed past Pfizer thanks to obesity drugs like Mounjaro. Pfizer now trades near historical lows—about 8.4x forward earnings—and is considerably cheaper than many large-cap pharmaceutical peers. The company's Seagen acquisition is starting to pay dividends in oncology, adding more than $6 billion in revenue since the deal closed in 2023. 
Although Pfizer has been slow to pivot into the obesity drug market, it has bolstered its pipeline by acquiring two smaller drugmakers with oral and injectable options. The market has largely written Pfizer off in this space, creating a wide valuation gap. Low expectations can create opportunity—the stock hasn't priced in successful inroads into the GLP-1 market. Additionally, Pfizer is an attractive defensive holding thanks to its low valuation and its history of dividend growth.
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