Value stocks are outperforming growth stocks right now.
That’s not a sentence that’s been uttered (or written) often over the past decade and a half. But for the past three months, it’s definitely true. Growth stocks – as measured by the Investors’ Business Daily 50 ETF (FFTY) – peaked in late October and are still 10% off their pre-Halloween apex. Value stocks – as measured by the Vanguard Value Index ETF (VTV) – have risen more than 4% during that time, and have really come on since the calendar flipped to 2026, advancing more than 3%.
We saw similar outperformance in the first few months of 2025. Eventually, growth stocks got hot again, and like a Ferrari speeding past a Subaru Outback, zoomed past them to close out another year of growth outpacing value, albeit marginally.
I own a Subaru Outback. It’s not much to look at it (it’s supposedly silver, but I’d call it more of a “gray”); it doesn’t go all that fast; and it doesn’t have many of the modern amenities common in most cars these days (lane sensors, a back hatch that opens automatically, seat heaters, etc.).
And yet … when it’s snowing or icing where I live in Vermont, which occurs quite often this time of year here, my Outback – which is built for rough winters due to its all-wheel drive and all-weather tires, making it the unofficial car of choice among practical Vermonters – can handle just about any type of weather or road condition. Several times already this winter, I’ve been driving back from a family ski day or one of my kids’ sporting events in fairly treacherous conditions, with much fancier cars off the road everywhere while my “Subee” … just keeps on driving, without much issue.
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Value Stocks: The Subaru Outbacks of Investments
Value stocks are a lot like my Subaru. Sure, when it’s sunny and warm in the market, growth stocks will likely zoom on past. But when it’s 15 degrees and sleeting out, value stocks will keep moving steadily forward while growth stocks spin off the road into a ditch.
Now, we’re still in a bull market, which means growth stocks are sure to pick up the pace again sometime soon. And that’s a good thing. Healthy growth stocks make for a healthy market, and a healthy market lifts all boats, like we saw last year when the S&P 500 advanced another 16% and value stocks rose a less-impressive but respectable 12%. You’d take a 12% gain every year in your portfolio – it’s better than the historical 10% average gain in the S&P.
In my Cabot Value Investor advisory, I seek out stocks with a combination of value and growth. In fact, I just added a big-name mega-cap growth stock that’s been so beaten down of late – mostly due to factors outside its control – that it now qualifies as a value play. And like other growth stocks that have gone off the road in recent months, I think it’ll soon get a tow truck and the necessary repairs and be back doing 80 in a 55 again.
When it comes to the value vs. growth stocks argument, I’m relatively agnostic. I also run Cabot Stock of the Week, which is a diversified portfolio but has been largely populated with growthier titles during this three-year bull market. In bull markets like this one, you’re better off going with growth. But you never know when the next pothole or swath of black ice may appear, to keep up the car analogy; remember what happened last March and April before and in the wake of “Liberation Day”?
Therefore, it pays to have a healthy portion of your portfolio devoted to value stocks. And if you need help identifying which ones to buy, you can sign up for my Cabot Value Investor newsletter.
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