Value investors have faced an uphill battle this year as the relentless AI trade continues to suck the oxygen out of Wall Street.
Speaking recently with CNBC, Ariel Investments founder and chief investment officer John Rogers warned that the broad market has become excessively expensive, driven by an “AI craze” that he expects will mirror the dot-com collapse.
Consequently, Rogers is aggressively uncovering deeply discounted, high-quality small-cap stocks – he believes these overlooked firms will thrive as the market rally broadens away from overhyped tech giants.
Here are three names Rogers is particularly bullish on for the remainder of 2026.
Covista (CVSA)
Covista is a leading for-profit education provider focused on training healthcare professionals.
CVSA shares have already rallied 20% this year, but John Rogers identifies a massive “long-term” macro tailwind: the severe global shortage of doctors and nurses.
According to him, a scalable, private-sector enterprise capable of addressing these critical deficits “is really, really important.”
During the CNBC interview, he touted CEO Stephen Beard for doing a “fabulous job” optimizing operations and keeping the academic pipeline on track.
Given that Covista is an essential solution to a structural global crisis, John Rogers believes the small-cap has “a lot of room to run” as valuation metrics reset.
Lazard (LAZ)
Rogers also identified massive upside in the premier investment banking firm Lazard, which is currently down about 20% year-to-date.
The veteran investor emphasized that “deals are getting done all the time, and it’s going to happen even more in this deregulated environment.”
The Ariel Investments founder applauded the leadership skills of CEO Peter Orszag, noting he has successfully infused the institution with fresh perspectives.
On “Power Lunch”, Rogers also praised the company’s president and co-head of financial advisory, Ray McGuire, as a “brilliant investor”.
Backed by a high-performing money management subsidiary, LAZ stock is uniquely positioned to capture a major windfall as advisory deals accelerate across the newly deregulated financial landscape.
Knowles (KN)
Rounding out Rogers’ preferred small-cap picks is components producer Knowles, a Chicago-area micro-acoustics leader whose shares have skyrocketed about 90% this year.
Knowles commands an elite market share in micro-mechanical microphones and specialized audio processing solutions.
Rogers is bullish on KN stock because the firm captures the structural benefits of technological innovation, such as smart automation and hearing-health upgrades, without the downside volatility of speculative tech plays.
Its steady margins and deep economic moat appeal perfectly to Ariel Investments’ patient investing framework.
For Rogers, Knowles exemplifies the rich, overlooked value sitting within the small-cap space – proving that substantial capital appreciation awaits investors willing to look past today’s mega-cap artificial intelligence obsession.
Wall Street also currently has an “Overweight” rating on Knowles, with price targets going as high as $50, indicating potential upside of more than 20% from here.
The post Best small-cap stocks to buy as market rally broadens appeared first on Invezz
