By Ian Salisbury

Value stocks are surging, thanks in part to tech stocks that have driven returns of the overall market. Fortunately, there are still plenty of undervalued stocks for bargain hunters.

It hasn't been a great era for value funds. Over the past five years, the iShares MSCI USA Value Factor exchange-traded fund has returned 12% a year on average. It isn't bad, but far behind the S&P 500's average return of nearly 14% a year.

This year however, the tide has shifted -- sort of. In 2026, the iShares value fund returned a blistering 7.2% in just three weeks. By contrast the broad market is essentially flat.

But there is a catch. The value fund's biggest return drivers are all tech stocks -- just not members of the Magnificent Seven that have gotten most of the attention for the past few years.

The fund's top holding is Micron Technology, whose shares have surged more than 35% this year, as the market has warmed to the potential of its high-bandwidth memory chips, which help power artificial-intelligence processors. Other top holdings include Intel, whose shares have gained 47%, and Western Digital, up 40% in 2026.

What gives? Analysts expect Micron Technology's earnings to increase 36% in 2026 and 43% in 2027. And yet with growth like that, it's still trading at a price-to-earnings ratio of less than 11, according to FactSet.

No matter -- even if those stocks might technically qualify for a value index, they aren't what many investors will want when they hunt for bargain stocks.

If you want more traditional names, take a look at some other stocks that have powered the iShares value ETF's returns in 2026. Agricultural commodities firm Bunge Global has leapt 25% in the past two weeks, but the shares still trade at less than 13 times forward earnings.

The stock is not without its blemishes. Wall Street analysts expect full-year 2025 profits to decline nearly 20% when the company next reports earnings in early February. The company has cited uncertainty around trade and biofuels policy. Still, profits are forecast to bounce back in 2026. With a dividend payout ratio of just 30%, its 2.5% yield looks safe.

Other standout value performers include Builders FirstSource, Teledyne Technologies, CNH Industrial, and Newmont Corp, all of which have seen shares surge around 20% since the start of the year.

Newmont, one of the world's largest gold miners, has ridden the yellow metal's 75% price surge over the past 12 months. Gold miners tend to represent magnified bets on the metal's price. With large fixed costs, they can be barely profitable when gold prices are low, then see margins balloon as gold prices spike.

That makes Newmont an extremely risky bet in the current market with gold already at record highs. Still, with President Donald Trump seemingly determined to shake up world politics and keep world leaders guessing, the gold rally shows no sign of slowing down.

Gold prices hit a record high of $4,908.80 an ounce on Thursday.

Write to Ian Salisbury at ian.salisbury@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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January 22, 2026 15:03 ET (20:03 GMT)

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