The distinction between value stocks and growth stocks is a topic of ongoing discussion. Generally, growth stocks refer to companies experiencing rapid expansion and trading at higher valuation ratios. In contrast, value stocks are often characterized by slower growth and more conservative valuation multiples.

Warren Buffett has famously remarked that price is what you pay, but value is what you receive. By this logic, a value stock is one that can be purchased for less than its intrinsic worth. At this moment, there is an investment opportunity that could appear to be a steal by 2026.

Tesla demonstrates how this stock could excel in 2026

For those who have held shares long-term, Tesla has delivered extraordinary returns. Since 2010, its stock price has soared by over 34,000%. Many elements contributed to Tesla’s ascent, but a key driver has been its success in delivering cost-effective electric vehicles to global markets.

About 70% of American car shoppers intend to spend under $50,000 on their next car. Internationally, automakers must offer budget-friendly vehicles to gain traction in emerging markets. Tesla’s current leadership in the electric vehicle (EV) industry is largely due to its ability to cater to buyers who aren’t looking to spend six figures on a car.

In 2017, Tesla introduced its first sub-$50,000 EV: the Model 3. Achieving this milestone took nearly 15 years and required billions in investment. Three years later, the company launched another affordable option, the Model Y. Today, these two models account for over 90% of Tesla’s vehicle sales.

It’s worth noting that sales growth was initially gradual. Fewer than 2,000 Model 3s were sold in 2017, but by 2019, that number had jumped to 300,000. The Model Y became even more sought after, and combined sales of these two models reached 1.2 million in 2022. In comparison, Tesla’s luxury vehicles, the Model X and Model S, sold only 66,000 units together that year.

Now, another electric vehicle manufacturer is preparing to emulate Tesla by releasing its own affordable models, and there’s reason to think its sales growth could be even more rapid. Yet, its stock is currently valued much lower than its competitors, despite its growth prospects.

 

Rivian is striving to become the next Tesla

When Rivian ( RIVN 0.85%) debuted on the public market in 2021, it was clearly seen as a growth stock. Its market capitalization reached $150 billion that year, with shares trading at lofty multiples of its previous sales. Today, Rivian’s market value has dropped below $20 billion, and its price-to-sales ratio is much lower than rivals such as Lucid Group and Tesla.

What caused this shift? Several issues have weighed on Rivian’s performance. New regulations affecting electric vehicles and the discontinuation of federal purchase incentives have put pressure on many EV manufacturers and their stock prices. Additionally, a lack of fresh model launches has slowed Rivian’s growth. However, the most significant factor was the market’s initial overvaluation of the company. After a sharp decline, Rivian now appears undervalued, presenting a compelling case for value investors.

Over the past 18 months, Rivian’s revenue has remained relatively stable. However, in 2026, the company plans to begin producing three new budget-friendly models: the R2, R3, and R3X. All three are SUVs, which are currently the most in-demand and fastest-growing vehicle segment. Since the launch of the Model Y and Model 3, EV sales have surged, giving Rivian a more developed market to compete in.

Given these factors, Rivian’s upcoming product launches could surpass the initial sales growth seen with Tesla’s Model 3 and Model Y. This could be a pivotal moment, as these launches were instrumental in transforming Tesla into a $1.4 trillion company. With a current market cap of just $18 billion, Rivian’s valuation does not reflect the significant growth its new models could bring in 2026 and beyond.