Stick with value stocks until everyone starts talking about them — they’re still under the radar, this Wall Street firm says

BofA’s strategists argue that value stocks remain an overlooked corner of the market, despite an environment that appears favorable to them. In a regime of higher interest rates and persistent inflation, companies with steady cash flows, solid balance sheets, and moderate valuations tend to hold up better than expensive growth names. Yet the firm says investors have been slow to rotate into this segment.

The reluctance may reflect habits formed during the past decade of ultra-low rates, when growth stocks consistently outperformed. If inflation stays sticky and central banks keep policy tighter, value’s relative appeal could strengthen. The market relevance lies in a potential rotation: broader participation beyond the few mega-cap technology names that drove recent gains.

For investors, the key watchpoint is sentiment. BofA suggests that as long as value remains a minority conviction, the trade may not be crowded. Clues to monitor include inflation data, central bank signals, and whether earnings growth broadens across sectors. A clear shift in investor conversation toward value would be a sign that the opportunity may be maturing.