My Top Value Stock to Buy for 2026 (and It's Not Even Close)

Key Points

• Former growth darling Rivian now trades at a surprisingly low valuation.

• Expect it to return to growth in 2026, to a degree that will make today's stock price look like a bargain.

• 10 stocks we like better than Rivian Automotive ›

There is a surprising amount of debate over the difference between value stocks and growth stocks. Typically, growth stocks are defined as companies with high growth rates that are priced at high valuation multiples. Value stocks, on the other hand, typically have lower growth rates and trade at more modest valuation multiples.

But as Warren Buffett has often said, price is what you pay, value is what you get. By this definition, a value stock is simply one that you can buy for less than it's really worth. And right now, there's one investment you can make that could come to look like a bargain in 2026.

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Tesla shows how this stock could win 2026

For its long-term holders, Tesla has been one of the greatest investments of all time. Since 2010, its shares have risen in value by more than 34,000%. There were many factors behind the company's rise, but perhaps the most pivotal catalyst has been the company's ability to ship affordable electric vehicles to markets around the world.

Roughly 70% of car buyers in the U.S. say they are looking to spend less than $50,000 on their next vehicle. Looking abroad, getting penetration in many emerging markets requires automakers to offer low-cost options. Tesla's dominance in the electric vehicle (EV) space today largely has to do with its ability to meet the needs of buyers who don't have $100,000 or more to spend.

In 2017, Tesla launched its first EV to be priced under $50,000: the Model 3. This achievement was nearly 15 years in the making, requiring billions of dollars of investment. Three years later, it debuted another affordable vehicle: the Model Y. Today, more than 90% of the company's vehicle sales stem from these two models.

Importantly, the sales ramp-up was fairly slow. Tesla sold fewer than 2,000 Model 3s in 2017. But that figure grew to 300,000 by 2019. Tesla's Model Y proved even more popular, and total sales of these two models reached 1.2 million in 2022. For comparison, the Model X and Model S -- Tesla's luxury models -- sold only 66,000 combined units in 2022.

Right now, another EV company is about to follow in Tesla's footsteps by launching its own affordable models, and there's reason to believe its sales ramp-up could be even steeper. Yet its shares trade at a relatively low valuation compared to its peers and growth potential.

Rivian is racing to become the next Tesla

When Rivian (NASDAQ: RIVN) went public in 2021, it was undoubtedly a growth stock. That year, the company's market cap hit $150 billion, with shares trading at huge multiples of its trailing sales. Today, its market cap is below $20 billion, and its price-to-sales ratio sits well below competitors like Lucid Group and Tesla.

What happened? Several factors contributed to Rivian's decline. New regulatory headwinds against electric vehicles and the government's decision to end federal subsidies on purchases have put pressure on many EV makers and their stock prices. Meanwhile, a lack of new model introductions has slowed Rivian's growth trajectory. By far the biggest factor, however, was simply that the market previously overvalued the company. But after a steep decline, it looks like Rivian's valuation has slid too far, giving value investors a tempting buying opportunity.

Over the last year and a half, Rivian's revenues have essentially held steady. But in 2026, management expects to begin production of three new affordable models: the R2, R3, and R3X. All three are SUVs -- the most popular, fastest-growing category of vehicle. EV sales in general have also exploded since the introductions of the Model Y and Model 3, giving Rivian a much more mature environment to operate in.

With all that in mind, Rivian's sales launch could outpace Tesla's Model 3 and Model Y launch. That could be a critical catalyst, considering these launches were partially what made Tesla into the $1.4 trillion behemoth it is today. With a market cap of just $18 billion, Rivian's valuation simply doesn't account for how much growth these new models could provide it with in 2026 and beyond.

Should you invest $1,000 in Rivian Automotive right now?

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Ryan Vanzo has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.