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Special Report These 3 Stocks Trade at Discounts the Market Won't Ignore ForeverWritten by Dan Schmidt. Article Posted: 1/5/2026. 
Key Points - 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, albeit below the 25% gains recorded in 2023 and 2024. AI euphoria remains the dominant market theme as we enter 2026, and names like NVIDIA Corp. (NASDAQ: NVDA) and Alphabet Inc. (NASDAQ: GOOGL) were higher to start the year. If you rode the AI rally since the 2022 market bottom, you are likely sitting on substantial gains and may be considering calls to diversify, especially if your allocation is tech-heavy. As the market begins 2026, the S&P 500 is trading at roughly 26x forward earnings — well above its 20-year average of about 16x. When valuations are this elevated, investors demand strong earnings growth, and high-multiple names can fall out of favor quickly if growth decelerates even slightly. If interest rates remain elevated, 2026 could be a year when value investing reclaims investor attention. This article looks at ways to de-risk a portfolio by adding stocks that start the year undervalued and overlooked. Each company below trades at a meaningful valuation discount to its industry peers, yet 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 among the biggest casualties of the cord-cutting wave as customers migrated away from bundled cable toward a la carte streaming options. CMCSA is roughly five months away from a "lost decade" milestone — trading near the price it fetched in May 2016. However, cord-cutting appears to be slowing as consumers face subscription fatigue; streamers are raising prices and getting entangled in costly carriage disputes with major networks. Meanwhile, Comcast has quietly built a durable balance sheet and diversified revenue streams. Comcast's forward price-to-earnings (P/E) ratio of about 6.84 sits well below the communications industry average (16.5) and far below major peers such as The Walt Disney Co. (NYSE: DIS) and AT&T Inc. (NYSE: T). 
Comcast's broadband segment is a steady, high-margin cash flow engine. Although Connectivity and Platforms revenue slowed 1.4% year-over-year in Q3 2025, EBITDA margins for the residential and business segments were 37% and 56%, respectively. NBCUniversal's advertising business should also benefit in 2026 from exclusive rights to marquee events such as 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 be gaining attention — the stock is up nearly 10% over the past 30 days, and several technical indicators point to additional upside potential. Micron: An Essential AI Stock Trading at a Deep Discount How can a stock that recorded roughly a 200% gain in 2025 still look undervalued? Despite its parabolic 2025 performance, Micron Technology Inc. (NASDAQ: MU) remains relatively cheap within the AI ecosystem, trading at about 29x earnings while parts of the tech sector trade near 75x. While a 29x P/E is not a bargain versus the broader market, it is attractive for a company producing very strong growth and margins: Micron posted roughly 57% year-over-year quarterly revenue growth and gross margins near 57%, and management has repeatedly raised guidance. 
Memory chips are a high-margin business, and Micron's management says it is struggling to keep pace with insatiable demand from data centers. The chart shows a pronounced uptrend with support along the 50-day simple moving average (SMA). TradeSmith's Health indicator places MU shares in the Green Zone, which signals a strong trend with healthy pullbacks. Pfizer: Fueling Pipeline Innovation Through Acquisitions Shares of healthcare giant Pfizer Inc. (NYSE: PFE) have lagged since COVID-19 revenues faded; the stock is down more than 30% over the past five years. Peers such as Eli Lilly and Co. (NYSE: LLY) have surged ahead thanks to obesity drugs like Mounjaro, but Pfizer now trades near historical lows on valuation (about 8.4x forward earnings) and is cheaper than most large-cap pharmaceutical peers. Pfizer's 2023 acquisition of Seagen is beginning to contribute meaningfully to oncology revenue, adding more than $6 billion in revenue since the deal closed. 
Although Pfizer's pivot into the obesity drug market has been gradual, it has strengthened its pipeline by acquiring two smaller drugmakers with oral and injectable treatment options. The market has largely discounted Pfizer in this space, which helps explain the valuation gap. Low expectations can create opportunities — the market may not yet be pricing in successful GLP-1 launches. Additionally, Pfizer is a defensive choice given its low valuation and its long history of dividend growth (see dividend history).
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