are value stocks a good buy now?

This article answers are value stocks a good buy now by defining value stocks, summarizing historical performance, reviewing late‑2025/early‑2026 market context and macro drivers, listing pros and ...

2025-12-25 16:00:00

By EtherLingo

Article rating

4.3

103 ratings

Bitget offers a variety of ways to buy or sell popular cryptocurrencies. Buy now!

A welcome pack worth 6200 USDT for new users! Sign up now!

Are value stocks a good buy now?

are value stocks a good buy now is a timely question for many investors. This guide explains what value stocks are, reviews the historical evidence for the value premium, summarizes late‑2024 through early‑2026 market signals and recent corporate results, and provides a practical checklist for evaluating whether value fits your portfolio today.

Definition and characteristics of value stocks

Value stocks are equities that trade at relatively low prices compared with fundamental measures of worth. Typical features of value stocks include:

Lower price multiples: low P/E (price-to-earnings), low P/B (price-to-book), and low EV/EBITDA relative to peers or historical averages.
Mature businesses: many value companies are in established industries (financials, energy, industrials, materials, some consumer staples and health care) with slower but steadier cash flows.
Dividend propensity: value stocks often pay dividends and return capital to shareholders.
Relative stability of cash generation: stable earnings and free cash flow can support valuations and dividends even when growth is limited.

Common valuation metrics used to classify value include P/E, P/B, EV/EBITDA, dividend yield and free cash flow yield. Factor research (value vs growth) typically ranks stocks by one or more of these metrics and selects the cheaper cohort as “value.”

Historical performance and the value premium

Long-term academic and industry work documents a historical value premium: cheaper stocks (by valuation metrics) have tended to outperform more expensive, high-growth stocks over very long horizons. Firms like Dimensional and multiple academic studies show that value has outperformed over multi‑decade windows on average, though with large variability.

Important caveats:

Cyclicality: value outperformance is not steady. Value has gone through extended stretches of underperformance lasting years or even more than a decade, followed by periods of strong catch-up.
Drawdowns and dispersion: in some regimes—particularly when low interest rates and strong technological growth dominate—growth stocks (and high‑multiple large caps) can materially outperform value for long periods.

Investors should therefore treat the historical premium as a long‑run tendency, not a timing indicator.

Recent market context (late 2024–early 2026)

The market backdrop entering 2026 featured several notable themes relevant to the question are value stocks a good buy now:

Concentration in large-cap tech and AI winners: from late 2023 into 2024 and parts of 2025, indices concentrated gains among a handful of large technology names. That widened valuation gaps between growth and value.
Signs of rotation: by late 2025 some managers and ETFs began reporting breadth returning to value‑oriented sectors. Industry commentary from asset managers and outlets highlighted renewed interest in energy, financials, industrials and other cyclicals.
Manager views and research houses: several providers (including Vanguard, Invesco, T. Rowe Price and Cabot commentary in early 2026) flagged the case to consider value exposure given elevated valuation dispersion and macro signals.

As of January 13, 2026, market reports on corporate earnings also showed mixed results across sectors that feed into the value vs growth debate: for example, a regional bank reported stronger‑than‑expected Q4 results (see BOK Financial summary below), while some large technology names faced fresh scrutiny on margins and competition.

Macro and market drivers that could favor value now

Interest rates and Fed policy

Interest‑rate moves change the discount rate applied to future cash flows. Higher rates tend to compress valuations of high‑growth companies whose earnings are concentrated far in the future, while boosting the relative appeal of nearer‑term cash generators typical of value companies. In late 2025, many strategists cited the elevated level of real yields and a late‑cycle backdrop as supportive of value relative to growth. Expected future rate cuts can change that dynamic and favor growth again, so monitor the Fed’s guidance and market expectations.

Economic growth, capex and AI infrastructure

Renewed capital expenditure cycles, industrial investment, energy demand and infrastructure spending (including AI datacenter build‑outs and related supply chains) can disproportionately benefit value sectors such as industrials, materials, energy and financials. Asset managers highlighted how non‑tech capex and reshoring trends may help value companies if durable.

Valuation dispersion and mean reversion

The premium paid for growth versus value reached elevated levels through 2024–2025. Large valuation spreads increase the theoretical potential for mean reversion: cheaper valuations offer larger upside if multiples normalize. Vanguard and Invesco commentary in late 2025 suggested that valuation dispersion made value relatively appealing from a long‑term perspective.

Arguments for buying value stocks now

Attractive relative valuations: many value indices and pockets of value trades below long‑run averages—a classic buy signal for value investors.
Diversification away from concentrated tech/AI risk: value exposure reduces dependence on a handful of mega‑cap growth names.
Macro tailwinds for cyclicals: industrial capex, energy demand and higher nominal rates can favor value sectors.
Historical long‑run evidence: over long horizons, cheaper stocks have tended to deliver higher average returns (Dimensional research).
Analyst picks: research houses and financial media highlighted specific large‑cap value candidates and value ETFs in early 2026—illustrative examples include stable financials, select energy names and health care staples.

Arguments against buying value stocks now / risks

Timing uncertainty: value can remain out of favor for long stretches. Short‑term rotations are difficult to time.
Cyclical exposure: many value names are economically sensitive and can underperform during a recession or commodity weakness.
Policy and rates: if central banks cut rates earlier or growth re‑accelerates in tech, growth stocks could resume leadership.
Company‑specific structural risk: some low‑priced stocks are ‘‘value traps’’ where weak fundamentals justify low multiples.
Concentration risk: over‑weighting a few value sectors can raise portfolio volatility if those sectors underperform.

How to evaluate whether value stocks are a good buy for you

Personal factors to consider

Time horizon: value investing is most effective with a multi‑year horizon that can capture mean reversion.
Risk tolerance: value exposure can reduce dependence on growth winners but add cyclical risk.
Portfolio diversification: consider how value fits with existing equity, fixed income and alternative holdings.
Tax and liquidity needs: turnover, dividends and rebalancing have tax implications.

Investment metrics and screening tools

Practical screening metrics include:

P/E and forward P/E
P/B and tangible book per share for banks and insurers
EV/EBITDA for industrials and energy names
Dividend yield and payout sustainability
Earnings and free cash flow stability
Balance‑sheet strength (debt/EBITDA, current ratio)
Analyst fair‑value estimates and consensus revisions

Use a combination of valuation metrics and quality checks (earnings durability, return on capital, management track record) to avoid value traps.

Macro indicators to watch

Fed guidance and market‑implied rate path
Inflation trends and real yields
Yield curve shape (inversions versus steepening)
Corporate earnings trends and sector breadth
Capital expenditure announcements and industrial activity

Implementation strategies

Passive approaches

Value ETFs and index funds provide simple exposure. Examples commonly used by investors include large‑cap value ETFs and mutual funds. Passive value can reduce single‑stock risk and provide low‑cost diversification.
Caveat: the index definition (which metrics and rebalance rules) matters—some value ETFs are more momentum oriented, others are strictly valuation based.

Active approaches

Active value funds and fundamental stock‑picking attempt to identify mispriced, high‑quality value names. Manager skill and research depth matter.
Active managers can add value in periods when dispersion is high, provided they avoid cheap companies with structural declines.

Blended/allocation strategies

Core‑sat: combine a passive core (broad market or multi‑factor index) with an active value sleeve.
Multi‑factor: use strategies that blend value with quality, momentum and low volatility to reduce single‑factor risk.
Rebalancing: systematic rebalancing (e.g., annually) can capture value mean reversion and enforce discipline.

Sector and geographic tilts

Consider non‑US developed markets for value exposure; some asset managers noted value opportunities outside the U.S. in late 2025.
Sector tilts toward financials, energy, industrials and certain health care segments are common when constructing a value sleeve.

Practical examples and recent picks (illustrative only)

To illustrate the practical side of the discussion, research houses and media through late 2025 and early 2026 highlighted specific value‑oriented names and funds. These are illustrative and not recommendations.

Financials: select regional and national banks with improving net interest margins and tangible book value growth were highlighted in early January 2026. Example metrics: a regional bank reported Q4 CY2025 revenue of $589.6 million and GAAP EPS of $2.89 — beating expectations and showing tangible book value per share of $79.83 (as of Jan 13, 2026, according to StockStory reporting on BOK Financial).
Industrials and energy: companies benefiting from capex and energy demand were named by asset managers as potential beneficiaries of a rotation into value.
Value ETFs: large‑cap value ETFs and Vanguard value funds were frequently cited as low‑cost ways to gain exposure.

Note: example metrics above are for illustration and drawn from public quarterly reports and media summaries. Always verify company filings and latest data before making decisions.

Company spotlight: BOK Financial (illustrative case relevant to value investors)

As of January 13, 2026, according to StockStory, BOK Financial reported Q4 CY2025 results that beat consensus estimates:

Revenue: $589.6 million (12.2% year‑over‑year growth; 7.1% beat vs consensus)
Net interest income: $345.3 million (10.3% y/y)
Net interest margin: 3.0% (beat estimates)
GAAP EPS: $2.89 (33.3% above analysts’ consensus of $2.17)
Tangible book value per share: $79.83 (14.9% y/y growth; market cap ~ $8.08 billion at report time)

These metrics show how some financial sector names can deliver both valuation support (book‑value anchoring) and earnings surprises. Value investors often track TBVPS (tangible book value per share) growth, P/TBV (price-to-tangible-book) and net interest margin trends for banks.

Caveat: BOK Financial’s five‑year revenue growth was modest by some standards, highlighting the need to weigh growth prospects against valuation when judging a stock’s value suitability.

Company spotlight: Delta Air Lines (illustrative case relevant to cyclical/value dynamics)

As of January 13, 2026, published reporting showed Delta reported Q4 CY2025 results with:

Revenue: $16.0 billion (2.9% y/y; beat estimates)
GAAP EPS: $1.86 (18.7% above consensus)
Operating margin and free cash flow dynamics that varied by quarter

Delta’s results demonstrate how cyclical, capital‑intensive businesses can surprise and also carry operating‑leverage risk. Airlines and other cyclical sectors are often represented in value indexes and can contribute to volatility in a value sleeve.

Common pitfalls and how to avoid them

Chasing “cheap” without quality screening: low multiples can reflect structural decline. Avoid by combining valuation metrics with quality filters (return on capital, stable free cash flow, manageable leverage).
Overconcentration: spreading value exposure across sectors and geographies reduces single‑sector shocks.
Ignoring macro signals: monitor rates, yield curves and earnings momentum—value can underperform when growth expectations re‑accelerate.
Poor timing: expect periods of extended underperformance; use dollar‑cost averaging or systematic rebalancing to mitigate timing risk.
Fees and implementation costs: prefer low‑cost passive funds or carefully justify higher active fees with expected value added.

Summary and investor checklist

Short takeaways addressing the question are value stocks a good buy now:

Value looks more attractive on relative valuation and diversification grounds as of early 2026, given elevated dispersion between growth and value and some macro signals favoring cyclicals.
Outcomes depend heavily on monetary policy, growth momentum and sector‑specific fundamentals; value can remain out of favor for long stretches.
A long‑term view, diversification, and disciplined implementation (passive, active or blended) are essential.

Investor checklist (quick):

Time horizon: is your horizon multi‑year?
Allocation target: what share of equities should be value in your plan?
Screening metrics: P/E, P/B, EV/EBITDA, dividend yield, TBVPS for banks.
Quality filters: positive free cash flow, reasonable leverage, management track record.
Macro watchlist: Fed guidance, inflation, yield curve, sector earnings.
Implementation: choose passive ETF, active manager, or blended approach and set a rebalancing plan.

References

Invesco (time to consider value commentary)
Vanguard (Where to find value in the U.S. markets)
Fidelity (What are value stocks)
Dimensional Fund Advisors (history of value premium)
Morningstar (top value stock research)
U.S. News (best value stocks lists)
Cabot Wealth (value vs growth discussion)
The Motley Fool (value stock picks)
T. Rowe Price (beyond big tech commentary)
Business Insider (Vanguard outlook summary)
StockStory (BOK Financial Q4 CY2025 report; as of January 13, 2026)
Public quarterly reporting summarized in market press (Delta Air Lines Q4 CY2025 results; as of January 13, 2026)

Notes and disclaimers

This article is informational only and not investment advice. It does not recommend any specific security, fund or strategy. Readers should consult a licensed financial professional for personalized recommendations. Data and company figures were summarized from public filings and market commentary; always verify current data directly from company reports and regulator filings.

Explore more market research and consider executing trades or managing crypto holdings using Bitget’s platform and Bitget Wallet for custody and operations.

The content above has been sourced from the internet and generated using AI. For high-quality content, please visit Bitget Academy.