'Forgotten' stocks that could be 2026 powerhouses

Boyer Research’s “Forgotten 40” – 2024 Stock Picks

Key Concepts: Value Investing, Catalyst-Driven Investing, Short-Term Outperformance, Diversification, Activist Investors, Tax Law Changes, Share Buybacks, Robo-Taxis, Capital Allocation, Market Concentration (MAG7).

I. Introduction & Investment Philosophy

Boyer Research has released its annual “Forgotten 40” list – a selection of 40 stocks anticipated to outperform in the coming year. Unlike Boyer Research’s typical 3-5 year long-term value investing strategy, this list focuses on catalyst-driven ideas, identifying stocks poised for short-term gains. President Jonathan Boyer emphasizes that these aren’t necessarily the cheapest stocks, but those with identifiable factors expected to drive performance within the year. He acknowledges the difficulty of macroeconomic forecasting, citing unexpected events like “Liberation Day” as examples of unpredictable influences.

II. Macro Catalysts & General Approach

While Boyer Research attempts to minimize reliance on broad macroeconomic predictions, they do consider specific legislative changes as potential catalysts. An example cited is upcoming tax law changes impacting professional sports teams. The overall strategy prioritizes identifying specific, company-level drivers of growth rather than attempting to predict overall market trends.

III. Specific Stock Picks & Catalysts

A. Atlanta Braves Holdings: This pick, a repeat from previous lists, is predicated on a tax law change taking effect in 2027. This law will prevent the deduction of income tax for the top five highest-paid employees, creating a competitive disadvantage for teams not facing this regulation. Boyer believes this will incentivize John Malone, the controlling shareholder, to sell the team, capitalizing on the current strong market for sports franchises and simplifying his business empire. The potential for a sale, and subsequent avoidance of the tax law, is the primary catalyst.

B. Markel Group: Described as a “baby Berkshire,” Markel Group is a diversified company run by Tom Gayner with a strong long-term track record. The catalyst here is the involvement of activist investor Janna Partners, who are working to unlock value, particularly within the insurance business. Markel is actively buying back shares, currently trading around $2,000 with a perceived value of $3,100.

C. Cooper Companies: This healthcare company, specializing in contact lenses and women’s health products, is attracting attention from two activist investors. The proposed catalyst is a split of the business into two separate entities – the dominant contact lens franchise (25% market share) and the women’s health division – to improve capital allocation and unlock value.

D. Uber: Included on the 2023 list, Uber experienced a 40% gain before a recent 15% drawdown due to concerns surrounding robo-taxis and autonomous driving. Boyer argues that Uber will benefit from the development of robo-taxis, not be harmed by it. He highlights Uber’s aggressive share buyback program and rapid growth as reasons for a continued long-term hold.

IV. Performance of the “Forgotten 40” & Value Investing Debate

In 2023, the “Forgotten 40” list achieved a 12.7% gain, outperforming most value indexes, but underperforming the S&P 500’s 14% return. This performance reignites the ongoing debate between value and growth investing. Boyer acknowledges the S&P 500’s current concentration in technology stocks (the “MAG7”) and argues that this represents a significant, concentrated bet.

V. Value as Diversification & Risk Mitigation

Boyer positions the “Forgotten 40” as a diversification tool, offering a hedge against the risks associated with the S&P 500’s heavy reliance on a small number of technology companies. He doesn’t view value investing as a simple “hedge,” but rather as a long-term strategy with a strong historical track record. He cautions investors against the risks of passive S&P 500 funds due to their concentrated exposure and advocates for a more diversified approach. He states, “I don’t view it as a hedge. I think investors should be wary of the risks of being in passive S&P 500 funds and think of diversifying because as I said earlier they’re it's full of technology names and is levered to you know five or six stocks.”

VI. Notable Quotes

• Jonathan Boyer: “This is a a good diversifier. And if some of the MAG7 stop starts stops being so magnificent, uh the S&P 500 should under should underperform and you know value is a good place to be.”
• Jonathan Boyer: “I don’t view it as a hedge. I think investors should be wary of the risks of being in passive S&P 500 funds and think of diversifying because as I said earlier they’re it's full of technology names and is levered to you know five or six stocks.”

VII. Conclusion

Boyer Research’s “Forgotten 40” list offers a catalyst-driven approach to value investing, focusing on short-term gains through specific company-level events. The list emphasizes diversification as a means of mitigating risk associated with the technology-heavy S&P 500 and provides investors with an alternative strategy for navigating the current market landscape. The core takeaway is that while growth has recently outperformed, value investing remains a historically strong long-term strategy, particularly in a concentrated market environment.