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5 Value Stocks to Buy as Core Inflation Rises and Odds of Another Rate Hike Climb
The U.S. market enters the final stretch of 2026 under pressure from rising energy costs and a Federal Reserve that is tightening again.
The latest inflation data shows the strain. Consumer prices rose 0.6% in September, up from 0.4% in August. Energy was the main driver. Gasoline jumped 9.1% and accounted for about half of the monthly increase. The U.S.-Israeli war with Iran has pushed Brent crude above $106 a barrel, and diesel prices at the pump are at record highs. Markets now worry that higher fuel costs will soon reach grocery shelves.
The bigger worry for investors is the core reading, which excludes food and energy. Core prices rose 0.3% in the month against expectations of 0.2%. Annual core inflation reached 2.6%, above the 2.5% forecast. A rising core reading suggests that energy costs and tariffs are feeding into the wider economy rather than staying confined to the petrol pump.
Last month, the Fed raised its benchmark rate by 25 basis points, its first hike in three years, and signaled more increases ahead. Traders now put the odds of another hike at its Oct. 27-28 meeting at about 54%, and at more than 96% by year-end, per CME Group's FedWatch tool.
With the mid-term elections approaching, investors face higher inflation, rising borrowing costs and geopolitical uncertainty at once. In such conditions, attention tends to move toward companies with solid earnings and reasonable valuations, which is where value stocks come in.
Value investors can consider stocks such as Honda Motor, Micron Technology, Avnet, Inc., Delek US Holdings and Plains GP Holdings, L.P., which have high earnings yields.
Understanding Earnings Yield Metric
One metric widely used by value investors to identify potentially undervalued stocks is earnings yield. Calculated by dividing a company's annual earnings per share by its current stock price, earnings yield indicates the amount of earnings generated for every dollar invested in a stock. Generally, a higher earnings yield suggests a stock may be undervalued relative to its earnings potential, while a lower earnings yield can indicate a richer valuation.
Earnings yield also provides a useful way to compare stocks with fixed-income investments such as bonds. When a stock's earnings yield exceeds prevailing bond yields, it may offer a more attractive return potential, making it a valuable tool for investors searching for opportunities in an uncertain market.
Our Picks
Here we highlight five of the 41 stocks that qualified the screening:
Honda is a leading manufacturer of automobiles and the largest producer of motorcycles in the world. The Zacks Consensus Estimate for HMC's fiscal 2027 and 2028 EPS implies year-over-year growth of 208% and 59%, respectively. EPS estimates for the current year and the next have moved up by 10 cents and 7 cents, respectively, over the past 30 days. Honda currently sports a Zacks Rank #1 and has a Value Score of A.
Micron is one of the leading worldwide providers of semiconductor memory solutions. The Zacks Consensus Estimate for HMC's fiscal 2027 and 2028 EPS implies year-over-year growth of 135% and 19%, respectively. EPS estimates for the current year and the next have moved up by $19.89 and $22.54, respectively, over the past 30 days. Micron currently sports a Zacks Rank #1 and has a Value Score of B.
Avnet is one of the world's largest distributors of electronic components and computer products. The Zacks Consensus Estimate for AVT's fiscal 2027 and 2028 EPS implies year-over-year growth of 84% and 7%, respectively. EPS estimates for the current and the next fiscal year have moved up by 79 cents and 87 cents, respectively, over the past 60 days. Avnet currently sports a Zacks Rank #1 and has a Value Score of B.
Delek US Holdings is an independent refiner, transporter and marketer of petroleum products. The Zacks Consensus Estimate for DK's 2026 EPS implies year-over-year growth of 142%. EPS estimates for the current and the next year have moved up by $4.02 and $4.73, respectively, over the past 30 days. Delek US Holdings currently sports a Zacks Rank #1 and has a Value Score of A.
Plains GP, through its subsidiaries, is involved in the transportation, storage, terminalling and marketing of crude oil and refined products. The Zacks Consensus Estimate for PAGP's 2026 and 2027 EPS implies year-over-year growth of 236% and 12%, respectively. EPS estimates for the current and the next year have moved up by $1.87 and $3.15, respectively, over the past 60 days. Plains GP currently sports a Zacks Rank #1 and has a Value Score of A.
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.
About Screen of the Week
Zacks.com created the first and best screening system on the web earning the distinction as the "#1 site for screening stocks" by Money Magazine. But powerful screening tools is just the start. That is why Zacks created the Screen of the Week to highlight profitable stock picking strategies that investors can actively use.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has more than doubled the market from 1988 through 2016. Its average gain has been a stellar +25% per year. See these high-potential stocks free >>.
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.
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Zacks.com featured highlights include Honda Motor, Micron Technology, Avnet, Delek US and Plains GP
For Immediate Release
Chicago, IL – October 16, 2026 – Stocks in this week’s article are Honda Motor (HMC - Free Report) , Micron Technology (MU - Free Report) , Avnet, Inc. (AVT - Free Report) , Delek US Holdings (DK - Free Report) and Plains GP Holdings, L.P. (PAGP - Free Report) .
5 Value Stocks to Buy as Core Inflation Rises and Odds of Another Rate Hike Climb
The U.S. market enters the final stretch of 2026 under pressure from rising energy costs and a Federal Reserve that is tightening again.
The latest inflation data shows the strain. Consumer prices rose 0.6% in September, up from 0.4% in August. Energy was the main driver. Gasoline jumped 9.1% and accounted for about half of the monthly increase. The U.S.-Israeli war with Iran has pushed Brent crude above $106 a barrel, and diesel prices at the pump are at record highs. Markets now worry that higher fuel costs will soon reach grocery shelves.
The bigger worry for investors is the core reading, which excludes food and energy. Core prices rose 0.3% in the month against expectations of 0.2%. Annual core inflation reached 2.6%, above the 2.5% forecast. A rising core reading suggests that energy costs and tariffs are feeding into the wider economy rather than staying confined to the petrol pump.
Last month, the Fed raised its benchmark rate by 25 basis points, its first hike in three years, and signaled more increases ahead. Traders now put the odds of another hike at its Oct. 27-28 meeting at about 54%, and at more than 96% by year-end, per CME Group's FedWatch tool.
With the mid-term elections approaching, investors face higher inflation, rising borrowing costs and geopolitical uncertainty at once. In such conditions, attention tends to move toward companies with solid earnings and reasonable valuations, which is where value stocks come in.
Value investors can consider stocks such as Honda Motor, Micron Technology, Avnet, Inc., Delek US Holdings and Plains GP Holdings, L.P., which have high earnings yields.
Understanding Earnings Yield Metric
One metric widely used by value investors to identify potentially undervalued stocks is earnings yield. Calculated by dividing a company's annual earnings per share by its current stock price, earnings yield indicates the amount of earnings generated for every dollar invested in a stock. Generally, a higher earnings yield suggests a stock may be undervalued relative to its earnings potential, while a lower earnings yield can indicate a richer valuation.
Earnings yield also provides a useful way to compare stocks with fixed-income investments such as bonds. When a stock's earnings yield exceeds prevailing bond yields, it may offer a more attractive return potential, making it a valuable tool for investors searching for opportunities in an uncertain market.
Our Picks
Here we highlight five of the 41 stocks that qualified the screening:
Honda is a leading manufacturer of automobiles and the largest producer of motorcycles in the world. The Zacks Consensus Estimate for HMC's fiscal 2027 and 2028 EPS implies year-over-year growth of 208% and 59%, respectively. EPS estimates for the current year and the next have moved up by 10 cents and 7 cents, respectively, over the past 30 days. Honda currently sports a Zacks Rank #1 and has a Value Score of A.
Micron is one of the leading worldwide providers of semiconductor memory solutions. The Zacks Consensus Estimate for HMC's fiscal 2027 and 2028 EPS implies year-over-year growth of 135% and 19%, respectively. EPS estimates for the current year and the next have moved up by $19.89 and $22.54, respectively, over the past 30 days. Micron currently sports a Zacks Rank #1 and has a Value Score of B.
Avnet is one of the world's largest distributors of electronic components and computer products. The Zacks Consensus Estimate for AVT's fiscal 2027 and 2028 EPS implies year-over-year growth of 84% and 7%, respectively. EPS estimates for the current and the next fiscal year have moved up by 79 cents and 87 cents, respectively, over the past 60 days. Avnet currently sports a Zacks Rank #1 and has a Value Score of B.
Delek US Holdings is an independent refiner, transporter and marketer of petroleum products. The Zacks Consensus Estimate for DK's 2026 EPS implies year-over-year growth of 142%. EPS estimates for the current and the next year have moved up by $4.02 and $4.73, respectively, over the past 30 days. Delek US Holdings currently sports a Zacks Rank #1 and has a Value Score of A.
Plains GP, through its subsidiaries, is involved in the transportation, storage, terminalling and marketing of crude oil and refined products. The Zacks Consensus Estimate for PAGP's 2026 and 2027 EPS implies year-over-year growth of 236% and 12%, respectively. EPS estimates for the current and the next year have moved up by $1.87 and $3.15, respectively, over the past 60 days. Plains GP currently sports a Zacks Rank #1 and has a Value Score of A.
For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/3008793/5-value-stocks-to-buy-as-core-inflation-rises-and-rate-hike-odds-climb
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.
About Screen of the Week
Zacks.com created the first and best screening system on the web earning the distinction as the "#1 site for screening stocks" by Money Magazine. But powerful screening tools is just the start. That is why Zacks created the Screen of the Week to highlight profitable stock picking strategies that investors can actively use.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has more than doubled the market from 1988 through 2016. Its average gain has been a stellar +25% per year. See these high-potential stocks free >>.
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Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Contact: Jim Giaquinto
Company: Zacks.com
Phone: 312-265-9268
Email: pr@zacks.com
Visit: https://www.zacks.com/
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.