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Strong 2023-2025 gains drove the S&P 500 close to 22 times forward earnings while entering 2026.
There were a few high-quality stocks that did not perform well in the year 2025 despite having solid cash flow.
Amazon, Walt Disney, Visa, and Exxon are trading at levels lower than their previous value, with visible 2026 catalysts.
After three consecutive years of unusually strong gains, the US stock market is entering 2026 on a cautious note. S&P 500 delivered roughly 25% returns in both 2023 and 2024, followed by close to 20% in 2025. Those gains have pushed valuations higher, with the index now trading near 22 times expected 2026 earnings.
Heading into 2026, stock selection matters more than broad market exposure, and value, quality, and underappreciated growth are back in focus. Many of the most interesting opportunities are stocks that lag while maintaining strong fundamentals. Here are the ten best stocks to buy in 2026, combining scale, cash flow, and identifiable catalysts.
Amazon stock is one of the most surprising laggards among the so-called Magnificent Seven as 2025 draws to a close. Despite its dominant position in e-commerce and cloud computing, the stock gained only modestly this year. Investor concerns have centered on heavy capital spending, a perceived slowdown at Amazon Web Services, and whether the company is keeping pace with peers in artificial intelligence.
However, the underlying business remains strong. Amazon still controls more than 40% of US e-commerce, AWS growth has reaccelerated, and its advertising business is now a massive profit engine. Trading at a lower earnings multiple than slower-growing competitors, Amazon looks positioned for renewed investor attention if margins and free cash flow continue to improve in 2026.
Bristol Myers Squibb has struggled in 2025, weighed down by drug pipeline disappointments and looming patent expirations. As a result, the stock trades at one of the lowest valuations in the pharmaceutical sector. Investors today are paying little for its future drug portfolio, despite several promising late-stage candidates.
With a dividend yield near 5% and a valuation that already reflects pessimism, Bristol Myers offers a combination of income and potential upside if its pipeline delivers or if strategic alternatives emerge.
Comcast is among the cheapest stocks in the S&P 500 based on forward earnings. The market has punished the stock due to slow erosion in its cable and broadband business. Still, Comcast generates substantial cash flow, pays a solid dividend, and continues to buy back shares. The hidden value lies in its media, entertainment, and theme park assets. Any corporate restructuring or separation could unlock meaningful value and shift investor perception.
Exxon Mobil remains the benchmark for global energy companies. Management projects double-digit annual earnings growth through the end of the decade, even under conservative oil price assumptions. The company’s integrated model helps smooth volatility, and its dividend record spans more than four decades of increases. For 2026, Exxon offers a blend of income, discipline, and resilience at a valuation that remains reasonable relative to its long-term prospects.
Fairfax Financial is often described as a smaller, more nimble version of Berkshire Hathaway. Led by founder Prem Watsa, the company combines insurance operations with a long-term investment strategy. Its size makes it easier to grow faster than larger conglomerates, and its book value continues to compound at an attractive pace. While US trading volume is limited, Fairfax remains a compelling option for investors seeking disciplined capital allocation.
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Flutter Entertainment dominates online sports betting through FanDuel, its flagship US platform. Recent share price weakness reflects fears that prediction markets could disrupt the industry. However, traditional sports betting, especially live wagering and parlays, remains highly profitable and difficult to replicate. If growth continues as expected, Flutter’s valuation could look attractive in hindsight.
MSG Sports owns two of the most valuable franchises in professional sports: the New York Knicks and New York Rangers. Despite soaring private-market valuations for sports teams, the stock trades at a steep discount to estimated asset value. Corporate actions such as partial sales, spinoffs, or tax-related changes could bring that gap into sharper focus in 2026.
SL Green is the largest office landlord in Manhattan, and its stock reflects deep pessimism about New York City real estate. While leverage and political concerns weigh on sentiment, management argues the shares trade well below the underlying asset value. Any stabilization in office demand or external investor interest could act as a catalyst.
Visa had a quiet 2025, but its long-term story remains intact. Digital payments continue to replace cash worldwide, and Visa’s margins and cash generation remain exceptional. Concerns around stablecoins and regulation have surfaced before, yet the company has adapted each time. Trading below its historical valuation average, Visa stock offers steady growth rather than speculation.
Disney controls some of the most valuable intellectual property in entertainment, yet trades at a valuation far below peers like Netflix. Short-term pressure from its parks business overshadowed improving profitability in streaming and media. With earnings growth expected to accelerate and leadership motivated to deliver results, Disney could regain favor in 2026.
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After years of momentum-driven markets, 2026 may reward patience and selectivity. These ten stocks share a common theme: strong businesses trading at prices that reflect skepticism rather than optimism.
Investors should watch for a shift toward earnings quality over hype, renewed interest in undervalued large caps. There may be selective growth tied to AI productivity, energy security, and consumer experiences. With valuations stretched, stocks showing durable cash flow, pricing power, and operational discipline are likely to stand out.
1. Why is stock selection more important in 2026?
Despite several years of significant appreciation, US stock market valuations have moved above average. Such higher valuations imply a less favorable environment for investing in the global market. Investors may get more value by selecting stocks with sturdy earnings, steady earnings flows, and fair stock prices rather than relying on market trends.
2. Why concentrate on stocks that underperformed in 2025?
Many of the stocks were lagging the market, not because the underlying business was deteriorating, but because of near-term concerns. However, when the fundamentals are sound, these could potentially offer better value down the line.
3. Are dividend stocks an attractive investment option for 2026?
Yes. Stocks that pay dividends, such as energy, pharma, and established large caps, offer a steady income stream during market uncertainty. As growth decelerates, dividends and share repurchases increasingly contribute to overall investment performance.
4. What is the impact of valuations on investing?
Investing more in a stock than it’s worth can limit potential future gains despite good performance. This is because when a stock is priced low, it provides a buffer, or safety net, against which a potential gain can be measured.
5. What themes should investors focus on in 2026?
Earnings quality, free cash flow growth, and pricing power are factors for investors to focus on. Opportunities in energy resilience, productivity through artificial intelligence, digital payments, and premium consumer experience can be selected for growth with acceptable risk.
