As investors worry that the U.S. stock market's gains may have "overextended into the future," capital is quietly flowing into another group of assets: "second-tier leaders" with improved profitability, compressed valuations, and a consensus among institutions for bullish prospects.
Despite the partial retracement of gains in the U.S. stock market this month, investor appetite for several high-growth technology stocks remains robust.
The tech-heavy$Nasdaq Composite Index (.IXIC.US)$Extending last year's momentum, it leads among the three major indices with an increase of over 20% year-to-date. The S&P 500 index has risen nearly 16% this year, while the Dow Jones Industrial Average, which comprises 30 stocks, has climbed 11.5%.
As 2026 approaches, analysts are using CNBC Pro’s stock screener to identify companies that may have been overlooked by the market. Analysts have specifically screened for$S&P 500 Index (.SPX.US)$components that meet the following criteria: year-to-date performance outpacing the broader market index, and forward price-to-earnings ratios falling below the S&P 500 average — indicating their valuations remain low, presenting a good buying opportunity.
The stocks ultimately identified by analysts meet the following standards: forward P/E ratios below 20x and lower than the S&P 500 average; year-to-date gains of 20% or more; and a consensus 'Buy' rating from Wall Street analysts.
According to the screening results,$CVS Health (CVS.US)$The stock price has surged more than 78% this year, but its forward price-to-earnings ratio is only around 11 times. The consensus target price given by analysts surveyed by the London Stock Exchange Group is $90.66, implying a potential upside of over 10% from current levels.
Of the 19 analysts covering the healthcare company, six have assigned it a 'Strong Buy' rating, while 18 have given it a 'Buy' rating. CVS reported better-than-expected earnings and revenue for Q3 at the end of October and raised its adjusted profit outlook due to improvements in its insurance business. However, management also cautioned that its Caremark pharmacy benefits management division is expected to experience 'modest growth deceleration' as it transitions into 'new drug pricing level contracts' in the coming years.
Chipmaker$Micron Technology (MU.US)$is another stock that appears undervalued, with a forward price-to-earnings ratio of 12 times — despite the stock having recorded an impressive gain of approximately 174% this year. According to data from the London Stock Exchange Group, analysts on average rate Micron Technology as a 'Buy'.
Morgan Stanley analyst Joseph Moore, who is bullish on the stock, reiterated his 'Overweight' rating earlier this month and named it a top pick. Moore noted that a supply shortage of dynamic random-access memory (DRAM) should help boost Micron’s profitability.
In a note to clients on November 13, he wrote, 'We believe this will push us firmly into uncharted territory from a profitability perspective, and we think the stock has yet to fully reflect the upcoming upside potential.'
Other top performers in this list that may still have room to rise include healthcare giant$AbbVie (ABBV.US)$and$Medtronic (MDT.US)$, gold mining companies$Newmont (NEM.US)$and power generation companies$Vistra Energy (VST.US)$。
Editor/melody