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These 3 Stocks Trade at Discounts the Market Won't Ignore Forever
By Dan Schmidt. Article 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 finished 2025 with a total return of roughly 18% — the third consecutive year above historical norms, though below the banner 25% returns of 2023 and 2024. AI euphoria remains the dominant market theme heading into 2026, and familiar names like NVIDIA Corp. (NASDAQ: NVDA) and Alphabet Inc. (NASDAQ: GOOGL) jumped again on the first trading day. If you rode the AI rally since the 2022 market bottom, you're likely sitting on substantial gains and may be thinking about diversifying, especially with 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 16x. When valuations are this elevated, investors demand strong earnings growth, and high-multiple stocks can fall out of favor quickly if growth softens. If interest rates remain high, 2026 could be the year value investing stages a comeback.
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[[Click here now to view.]]Below are three ways to de-risk a portfolio by adding stocks that start the year undervalued and overlooked. Each company trades at a meaningful discount to its industry peers, but underlying fundamentals and technical indicators suggest those discounts may not last.
Comcast: Strong Balance Sheet and Sports Expansion Improve the Outlook
The Comcast Corp. (NASDAQ: CMCSA) was one of the biggest victims of the cord-cutting shift, as customers abandoned expensive cable bundles for a la carte streaming services.
CMCSA is approaching what many investors call a "lost decade": the stock still trades near the same price it did in May 2016.
But cord-cutting fatigue is setting in — streamers are raising prices and getting into costly carriage disputes with major networks.
Meanwhile, Comcast has quietly built a sturdy balance sheet and diversified revenue streams. Its forward price-to-earnings (P/E) ratio of 6.84 is far below the communications-industry average (16.5) and below major competitors such as The Walt Disney Co. (NYSE: DIS) and AT&T Inc. (NYSE: T).
Comcast's broadband business is a steady, high-margin cash-flow engine. Although Connectivity and Platforms revenue slowed 1.4% year-over-year (YOY) in Q3 2025, EBITDA margins for 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, helping support its 4.4% dividend. Comcast's value case may be gaining wider attention — the stock is up nearly 10% over the past 30 days, and several technical signals point to further upside.
Micron: An Essential AI Supplier Trading at a Discount
How can a stock that gained roughly 200% in 2025 still be considered undervalued?
Despite its parabolic run last year, Micron Technology Inc. (NASDAQ: MU) remains comparatively cheap within the AI supply chain, trading at about 29x earnings while some high-growth tech names trade near 75x.
A 29x P/E isn't bargain-basement cheap relative to the broader market, but it looks attractive for a company reporting 57% YOY quarterly revenue growth, roughly 57% gross margins, and repeated upward guidance revisions.
Memory chips are high-margin products, and Micron's management says 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). That aligns with the TradeSmith Health indicator: MU shares are in the Green Zone, signaling a strong trend with orderly pullbacks.
Pfizer: Funding Pipeline Growth Through Acquisitions
Pfizer Inc. (NYSE: PFE) has lagged since the COVID-19 pandemic receded; the stock is down more than 30% over the past five years.
Peers like Eli Lilly and Co. (NYSE: LLY) have outpaced Pfizer thanks to obesity drugs such as Mounjaro. Still, Pfizer now trades near historical valuation lows (about 8.4x forward earnings) and is cheaper than most large-cap pharmaceutical peers.
The company's acquisition of Seagen is beginning to boost its oncology franchise, contributing more than $6 billion in revenue since the 2023 close.
Although Pfizer was slow to pivot into the obesity-drug market, it has strengthened its pipeline by acquiring two smaller companies with oral and injectable treatment candidates. The market has largely discounted Pfizer's prospects in this space, which helps explain the valuation gap. Low expectations can create opportunities — the stock hasn't fully priced in successful inroads into the GLP-1 market. Additionally, Pfizer remains an attractive defensive holding given its low valuation and long history of dividend growth.
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