These undervalued stocks blew away the S&P 500 in 2025 — a 2026 repeat is likely

Core Viewpoint - Non-U.S. stocks have significantly outperformed U.S. stocks in 2025, with a return of 33.1% compared to the S&P 500's 16.3%, indicating a strong investment opportunity in non-U.S. equities moving forward into 2026 [2][3]. Valuation Comparison - Non-U.S. equities are currently valued more attractively than U.S. stocks, with a lower average CAPE ratio compared to the U.S., which is more than double that of other monitored countries [4][3]. - The CAPE ratio, a key valuation metric, suggests that the U.S. stock market is experiencing extreme overvaluation, with an average reading of 98% across various indicators indicating a bearish outlook for U.S. equities [6][7]. Currency Impact - The declining U.S. dollar has contributed to the outperformance of non-U.S. stocks, enhancing their dollar-denominated returns, although even without further depreciation, non-U.S. equities are still expected to outperform U.S. stocks [3].