By Jacob Sonenshine
The market has become sharply divided between winners and losers, offering an opportunity to pick stocks that have been beaten down more than they deserve.
While the S&P 500 is up almost 9% for the year and has recently touched new records, only 270 stocks were in the green for 2026 as of Wednesday morning, according to FactSet. That means nearly half of the index's constituents have declined so far this year.
It also means there's a likely a subset of names that are too cheap -- and ready to rally.
Consider this: The index's gain stems from semiconductor stocks, which have surged on artificial-intelligence companies' growing demand for data center products. Other manufacturers that sell to data center builders have benefited and seen their stocks lead the market higher.
On the flip side, software stocks have slumped as many of these companies face competitive threats from OpenAI and Anthropic. Consumer discretionary and financials' shares are down, too, on worries about higher costs from the Iran war's energy price shock; some chance that the Federal Reserve could lift interest rates; and private credit turmoil.
Seaport Research Partners' chief equity strategist, Jonathan Golub, screened for stocks that could make a comeback.
He looked at stocks that have fallen out of favor with a breadth of equity investors (mostly long-term investors and hedge fund managers). Each stock received an overall score showing whether the thousands of portfolio managers Seaport surveyed have above-or below-historical-average exposure to it in their portfolios.
The stocks that managers have aggressively dumped could bounce back soon because, in Golub's decades of experience, "positioning data is mean-reverting," he writes. "The greatest opportunities exist when long-only, hedge fund and sell-side positioning is extended and reversing."
In other words: Stocks that have been largely discarded, but that have also recently seen a small uptick in buying from their worst levels, are the ones to look at. Investors don't currently have large positions in them, so they have wiggle room in their portfolios to take a chance on a few more shares -- and they have recently shown the proclivity to do that.
A few names that fit the description are Oracle, Accenture, CCC Intelligent Solutions, Roper Technologies, Ciena, Cognex, Enphase Energy, Hewlett Packard Enterprise, Match Group, and IAC, according to the Seaport survey.
Notice that many of theses names are software or consumer and business services companies. Those are the market's suspects for companies that could experience disruption from AI models, which appear to have the technological potential to provide an array of services down the line.
Accenture is a particularly interesting prospect. The $100 billion consulting company focuses on helping customers integrate new systems and software, including AI, into their businesses, which it charges fees for. The fear is OpenAI's recent investment of just over $4 billion into its own AI consulting business will hurt Accenture.
But it doesn't have to shake out that way. Out of all of the tech areas OpenAI has its eye on -- the core ChatGPT, enterprise software, cybersecurity, media and design, and now consulting -- it might not prioritize or scale up all of those businesses.
That's true at least for the near term. Kevin McVeigh, UBS analyst, notes OpenAI's 150 engineers today is tiny compared with Accenture's more than 300,000. Plus, "OpenAI -- despite its capital backing and strategic intent -- likely doesn't offer the same delivery capacity, global footprint, or operational infrastructure required to execute complex multiyear AI programs independently," he writes.
That -- combined with an incredibly cheap valuation and the room that portfolio managers have to add to their positions -- makes Accenture look appealing. It trades at 11 times analysts' expected earnings for the coming 12 months, about half of the S&P 500's multiple and below the 19 times it traded at the start of the year, before the AI concerns erupted.
The catalysts for a rebound would be more proof that OpenAI isn't an existential threat, and continued execution each quarter. (Accenture has beaten earnings in 18 of the last 20 quarters.)
Take a peek at some of these companies.
Write to Jacob Sonenshine at jacob.sonenshine@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
May 13, 2026 15:52 ET (19:52 GMT)
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