The State of Value Investing 2026
The annual report on value investing as practiced through the invest-like 7-framework consensus screen. Cohort returns, sector tilts, halal universe analysis, top 50 7-of-7 picks of 2026, and methodology evolution.
Published:
Executive summary
The 7-of-7 consensus cohort (n=47) returned a median +154.6% over the trailing 5-year window, vs SPY at +80.8% over the same window. The +73.8 percentage-point outperformance is consistent with the academic literature on multi-factor value strategies: the more frameworks a stock passes simultaneously, the more independent selection criteria it has satisfied, and the lower the probability the signal is from luck.
The cohort tilts heavily toward Technology (30.6%), Financials (17.7%, mostly quality compounders rather than large banks), and Industrials (15.3%). Consumer Discretionary, Energy, and Real Estate are near-absent at the 7-of-7 level; these sectors rarely clear all seven framework filters simultaneously.
The AAOIFI Standard 21 halal overlay does not depress cohort returns: 66.0% of the 7-of-7 cohort is halal-compliant, and the halal-compliant subset returned +148.2% over 5 years (within noise of the full cohort). For Muslim investors applying the Standard 21 screen, the value cohort remains accessible without a meaningful return drag.
Methodology updates in 2026: deal-breaker caps tightened on the management pillar (formerly a soft ceiling, now hard); financial-health threshold for net-debt/EBITDA tightened to below 2.0x from below 2.5x; the Smith framework added a new ROCE 5-year trend requirement.
Cohort returns by framework count
Stocks ranked by how many of the seven investor frameworks they pass at entry. Returns are 5-year medians, locked entry timestamps, no rebalancing. Every cohort below dropped its own losers; the table reflects realised outcomes including failures.
| Tier | N | 1y med | 5y med | vs SPY 5y | Alpha (pp) |
|---|---|---|---|---|---|
| 7 of 7 (all-pass) | 47 | 24.3% | 154.6% | 80.8% | +73.8 |
| 6 of 7 | 124 | 19.7% | 121.4% | 80.8% | +40.6 |
| 5 of 7 | 287 | 16.8% | 104.7% | 80.8% | +23.9 |
| 4 of 7 | 542 | 13.2% | 88.4% | 80.8% | +7.6 |
| 3 of 7 | 1108 | 10.4% | 71.8% | 80.8% | -9.0 |
The 3-of-7 cohort underperformed SPY (alpha -9.0 pp), confirming the signal is not from blanket value-tilting: passing only three frameworks is below the noise floor and the cohort underperforms. The signal requires sufficient criteria to be satisfied simultaneously.
Sector tilts in the consensus screen
Sector distribution of the 5+/7 consensus cohort (n=124). Technology, Financials (quality compounders), and Industrials dominate; Energy, Real Estate, and Utilities are nearly absent.
Highest representation; software + select semis dominate the 6+/7 cohort
Quality compounders (asset managers, exchanges); large banks underweight
Wide-moat franchises with multi-decade compounding records
Specialty pharma + medical devices; large-cap pharma rare
Brand-moat dominance; the traditional Buffett hunting ground
Network-effect platforms (the few that pass valuation discipline)
Highly concentrated; only the strongest brand-moats clear all 7
Specialty chemicals only; commodity producers rarely pass
Combined; sector-specific dynamics rarely match all-7 criteria
Halal universe analysis
The AAOIFI Standard 21 halal-compliance screen applied to the same consensus cohort. Documented in detail in the AAOIFI implementation paper.
AAOIFI-compliant universe
Of ~12,500 US-listed tickers screened
5+/7 consensus passes that are halal-compliant
Higher than market-wide compliance rate due to sector tilt
7-of-7 all-pass that are halal-compliant
The intersection of value + halal favors quality-tech and consumer brands
Median halal-cohort 5y return
Within noise of the overall cohort (+154.6%); halal screen is not a return drag
Top 10 7-of-7 picks of 2026
The ten stocks currently passing all seven frameworks ranked by composite score. Educational only, never financial advice. The full 47-name 7-of-7 list lives on the live consensus screen.
| # | Ticker | Grade | Why it passes all 7 |
|---|---|---|---|
| 1 | MSFT | A | All 7 frameworks pass; wide-moat enterprise software franchise |
| 2 | GOOGL | A | Search + ad-tech network effects; fair multiple given cash generation |
| 3 | V | A | Payment network moat; toll-bridge economics |
| 4 | MA | A | Same as V; duopoly structure with global growth |
| 5 | ADBE | A | Creative cloud subscription lock-in; quality compounder |
| 6 | AAPL | A | Brand moat + services flywheel; valuation the swing pillar |
| 7 | NVO | A | Diabetes + GLP-1 franchise; obesity tailwind through decade |
| 8 | BRK.B | A | Diversified holding co; the case study in itself |
| 9 | COST | A | Membership-flywheel retail; rare consumer-discretionary pass |
| 10 | HD | A | Home improvement duopoly with US housing demographics |
Methodology evolution: 2025 to 2026
The rubrics shipped at the start of 2026 differ from 2025 in three ways. Each change is versioned in the database and every historical verdict stores the rubric version it was produced under, so any number is traceable to the exact rubric that produced it.
- 1Management pillar deal-breaker hardened. Insider sells exceeding 5% of float in any 90-day window now hard-cap the management score at 40 (formerly a soft ceiling). Effect: tightens the management bar; pushes 4 tickers from B to C grade.
- 2Net-debt/EBITDA threshold tightened. Financial-health pillar now requires net-debt/EBITDA below 2.0x to fully pass (formerly below 2.5x). Reflects 2025 to 2026 rate environment where higher interest expense penalises levered balance sheets.
- 3Smith framework added ROCE-trend requirement. The Smith framework now requires 5-year ROCE trend positive (in addition to the existing ROCE-above-15% level test). Closes a loophole where a stock could hit the level once and fail it the next year.
Related
- Track record - the live 30-stock model portfolio with locked entry timestamps.
- Benchmarks - the headline number in multi-baseline academic context.
- Halal mode - the live AAOIFI Standard 21 screen applied to every ticker.
- Working papers - the two papers cited in this report with full PDFs.
Educational only. Past performance does not guarantee future results. Cohort returns reflect realised outcomes including failures; survivorship effects are documented in the working paper. invest-like is not a registered investment adviser.