Growth stocks—led by large technology firms—have been dominating returns over the preceding decade, with growth-focused ETFs like the Vanguard Growth ETF significantly outperforming value peers. But recent performance data show that value indices have started to close that gap. The Morningstar US Value Index posted gains compared to the previous year while the US Growth Index lagged in November, signaling capital rotation into value sectors such as financials and healthcare that have more attractive valuation multiples and cash flows.

From a macro and valuation perspective, conditions heading into 2026 further bolster the case for value over growth. With interest rates no longer at historic lows, the high discount rates that once boosted the present value of future growth earnings are less supportive of sky-high growth valuations. In contrast, value stocks, trading at lower valuations with stronger current earnings and often paying dividends, tend to hold up better when monetary policy moves toward normalization and economic growth moderates.

Here, we discuss three such stocks — Centerra Gold (CGAU Quick QuoteCGAU - Free Report) , Commercial Metals (CMC Quick QuoteCMC - Free Report) and Symrise (SYIEY Quick QuoteSYIEY - Free Report) —  whose valuations remain compelling relative to earnings and fundamentals, positioning them to potentially benefit from a sustained rotation toward value in 2026.

However, this apparently simple value investment technique has some drawbacks, and not understanding the strategy properly may often lead to “value traps.” In such a situation, these value picks start to underperform over the long run as the temporary problems, which once drove the share price down, turn out to be persistent.

There are many value investment yardsticks, such as dividend yield, P/E or P/B, which are simple and can single out whether a stock is trading at a discount.

However, for investors looking to escape such value traps, it is also vital to determine where the stock would be headed in the next 12 to 24 months. Warren Buffett advises these investors to focus on the earnings growth potential of a stock. This is where lies the importance of a not-so-popular value investing metric, the PEG ratio.

PEG Ratio at a Glance

The PEG ratio is defined as (Price/ Earnings)/Earnings Growth Rate

A low PEG ratio is always better for value investors.

While P/E alone fails to identify a true value stock, PEG helps find the intrinsic value of a stock.

There are some drawbacks to using the PEG ratio. It doesn’t consider the common situation of changing growth rates, such as the forecast of the first three years at a very high growth rate, followed by a sustainable but lower growth rate over the long term.

Hence, PEG-based investing can turn out to be even more rewarding if some other relevant parameters are also taken into consideration.

Here are some of the screening criteria for a winning strategy:

PEG Ratio less than X Industry Median

P/E Ratio (using F1) less than X Industry Median (for more accurate valuation purposes)

Zacks Rank #1 (Strong Buy) or 2 (Buy) (Whether good market conditions or bad, stocks with a Zacks Rank #1 or 2 have a proven history of success.)

Market Capitalization greater than $1 billion (This helps us to focus on companies that have strong liquidity.)

Average 20-Day Volume greater than 50,000 (A substantial trading volume ensures that the stock is easily tradable.)

Percentage Change F1 Earnings Estimate Revisions (4 Weeks) greater than 5% (Upward estimate revisions add to the optimism, suggesting further bullishness.)

Value Score of less than or equal to B: Our research shows that stocks with a Style Score of A or B when combined with a Zacks Rank #1, 2 or 3 (Hold) offer the best upside potential. 

Our PEG-Driven Picks

Here are three stocks that qualified the screening:

Centerra Gold: The company acquires, explores, develops, and operates gold and copper assets across North America, Turkiye and other regions. Its key operations include the Mount Milligan gold-copper mine in British Columbia and the Oksut gold mine in Turkiye, with additional molybdenum exploration activities.

CGAU currently has a Zacks Rank #1 and a Value Score of B. It also has an impressive five-year expected growth rate of 27.4%.

Commercial Metals: Irving, TX- based Commercial Metals Company manufactures, recycles and markets steel and metal products, related materials and services.  It provides these through a network of facilities, including seven electric arc furnace ("EAF") mini mills, two EAF micro mills, a rerolling mill, steel fabrication and processing plants in the United States and Poland.

CMC currently has a Zacks Rank #1 and a Value Score of B. It also has an impressive five-year expected growth rate of 25.6%.

Symrise: The company supplies fragrances, flavors, cosmetic and functional ingredients worldwide. Symrise operates through Taste, Nutrition & Health and Scent & Care segments, offering food and beverage solutions, natural and sustainable ingredients, pet and fish feed products, and probiotics for supplements and functional foods.

SYIEY currently has a Zacks Rank #2 and a Value Score of A. It also has an impressive five-year expected growth rate of 14.9%.

You can see the complete list of today’s Zacks #1 Rank stocks here.

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Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.

Disclosure: Performance information for Zacks’ portfolios and strategies are available at: https://www.zacks.com/performance.

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