4 Value Stocks to Buy Amid Costly AI Bets and Inflation
Markets are navigating an increasingly uncertain environment. Memory giant Micron rallied big yesterday after reporting strong earnings, showing that investors continue to reward companies delivering solid results. At the same time, a broader sell-off in technology stocks suggests growing concerns that the massive artificial intelligence (AI) spending boom has pushed valuations too high and may take longer to generate meaningful returns. Add to that an inflation reading last month that hit a three-year high, with even the core PCE index climbing at its fastest pace in nearly three years.
This combination of AI spending fears, persistent inflation and macro uncertainty makes chasing momentum risky. Instead, investors may be better served by focusing on businesses with proven earnings, healthy balance sheets, and attractive valuations. Value investing is a prudent strategy now, offering a greater margin of safety while positioning investors to benefit from companies whose fundamentals remain strong despite short-term market volatility.
Value investors can consider stocks such as Darling Ingredients Inc.DAR, Green Plains Inc. GPRE, Ternium S.A. TX and Nexa Resources NEXA, which have high earnings yield.
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.
Setting the Right Filters
We have set an Earnings Yield greater than 10% as our primary screening criterion but it alone cannot be used for picking stocks that have the potential to generate solid returns. So, we have added the following parameters to the screen:
Estimated EPS growth for the next 12 months greater than or equal to the S&P 500: This metric compares the 12-month forward EPS estimate with the 12-month actual EPS.
Average Daily Volume (20 Day) greater than or equal to 100,000: High trading volume implies that a stock has adequate liquidity.
Current Price greater than or equal to $5.
Buy-Rated Stocks: Stocks with a Zacks Rank #1 (Strong Buy) or 2 (Buy) have been known to outperform peers in any type of market environment. You can see the complete list of today’s Zacks #1 Rank stocks here.
Our Picks
Here we have discussed four of the 33 stocks that qualified the screening:
Darling Ingredients is a provider of rendering, cooking oil and bakery waste recycling and recovery solutions. The company benefits from differentiated brand positioning tied to sustainability, ingredient recovery and renewable energy production. Through its integrated portfolio spanning feed ingredients, specialty food ingredients, biogas and renewable diesel, Darling Ingredients serves a broad customer base across agriculture, food manufacturing, health and energy industries.
The Zacks Consensus Estimate for DAR’s 2026 and 2027 EPS implies year-over-year growth of 588% and 8%, respectively. EPS estimates for the current and next year have moved up by 95 cents and 82 cents, respectively, over the past 60 days. Darling Ingredients currently sports a Zacks Rank #1 and has a Value Score of B.
Green Plains is a vertically integrated producer, marketer and distributor of ethanol. It is repositioning itself beyond commodity ethanol, investing in its Sequence Protein platform and renewable corn oil to extract greater value from every bushel processed. The high-protein feed ingredients have gained meaningful traction, with international shipments scaling rapidly. Rather than treating ingredients as a sideline, Green Plains has framed this shift as a fundamental transformation toward becoming a diversified ag-tech and biorefining company.
The Zacks Consensus Estimate for GPRE’s 2026 EPS implies year-over-year growth of 217%. EPS estimates for the current year have moved up by $1.54 over the past 60 days. Green Plains currently sports a Zacks Rank #1 and has a Value Score of A.
Ternium, a leading Latin American flat and long steel producer, is well-positioned to benefit from recovering demand and firmer steel prices across key markets. Mexico's commercial sector is rebounding post-destocking, infrastructure spending is supporting shipments, and Brazil's automotive demand remains solid, aided by favorable trade measures. Cost-competitive facilities and proactive steps to bolster liquidity further strengthen Ternium’s outlook.
The Zacks Consensus Estimate for TX’s 2026 and 2027 EPS implies year-over-year growth of 138% and 19%, respectively. EPS estimates for the current year and the next have moved up by 42 cents and 9 cents, respectively, over the past seven days. Ternium currently sports a Zacks Rank #1 and has a Value Score of A.
Nexa, one of the world's largest zinc producers, is well-positioned amid favorable zinc, silver, and copper prices. Strong operational momentum— including record output at Aripuanã— underscores improving mine performance. Growth projects like Cerro Pasco Integration extend mine life and boost profitability, while reduced streaming obligations at Cerro Lindo increase silver price exposure, supporting stronger cash generation and long-term shareholder value.
The Zacks Consensus Estimate for NEXA’s 2026 sales and EPS implies year-over-year growth of 14% and 230%, respectively. EPS estimates for the current and next year have moved up by 14 cents and 24 cents, respectively, over the past seven days. Nexa currently sports a Zacks Rank #1 and has a Value Score of A.
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See Stocks Free >>This article originally published on Zacks Investment Research (zacks.com).
