Options Action: 5 Best Value Stocks to Buy as the Dow Crosses Record Highs

 

Options Action: 5 Best Value Stocks to Buy as the Dow Crosses Record Highs

**Subtitle:** *From financials to healthcare, the "boring" stocks are suddenly stealing the spotlight. Here is how to position your portfolio for the Great Rotation as AI fatigue sets in.*

**Reading Time:** 8 Minutes | **Category:** Markets & Investing

## Introduction: The Day the Nasdaq Blinked

For months, the stock market has been a one-trick pony. Buy the AI dip. Ignore the valuations. Trust that the Fed will cut rates. The Nasdaq soared, and the Dow Jones Industrial Average—home to the "boring" industrial and financial giants—was left in the dust.

On Thursday, June 4, 2026, the tables turned.

The Dow Jones Industrial Average surged 874 points, or 1.7%, to close at a fresh all-time high of **51,561.93** . It was one of those rare sessions where "boring" suddenly became beautiful. Healthcare, banks, and consumer staples took center stage while many high-flying AI and semiconductor names watched from the sidelines .

The rally was broad-based, with **25 of the 30 Dow components** trading higher—signaling widespread buying interest rather than a narrow advance led by a handful of stocks . Financials led the charge. Goldman Sachs jumped nearly 5%, JPMorgan rose over 3.5%, and American Express added more than 4% . Healthcare stocks were equally strong, with UnitedHealth surging 5.2% and Merck climbing 3.7% .

Meanwhile, the Nasdaq Composite slipped 0.1% as investors looked beyond the usual tech darlings . Broadcom cratered 14% after its earnings "disappointment," dragging the entire semiconductor sector down with it .

This is not a market crash. It is a **Great Rotation**. And understanding where the money is flowing is the key to protecting—and growing—your portfolio in the second half of 2026.

J.P. Morgan analysts note that value stocks are now outperforming growth by nearly **11 percentage points** year-to-date, the widest margin since last spring's tariff-related volatility . The Magnificent Seven's dominance is fading. In 2023, all seven beat the S&P 500. In 2024, six did. Last year, just two did. And in 2026 so far, only one is outperforming the index .

This deep-dive will break down the forces driving the Great Rotation, identify the five best value stocks to buy as the Dow hits record highs, and explain the options strategies that can help you profit from the shift.

## Part 1: The Great Rotation – Why Value Is Suddenly Winning

The term "value investing" has been out of fashion for years. Growth stocks—especially those tied to artificial intelligence—have delivered astronomical returns, and "value" seemed like a relic of a bygone era.

That narrative is now reversing.

### The Value Outperformance Gap

According to J.P. Morgan Asset Management, the Russell 1000 Value Index has returned about **8% year-to-date**, compared to a flat return for the Russell 1000 Growth Index. The divergence is even starker for mid-caps and small-caps. The Russell 2000 Value Index is up 12%, compared to an 8% YTD return for the Russell 2000 Growth Index .

| Index | Year-to-Date Return |

| :--- | :--- |

| Russell 1000 Value | ~8% |

| Russell 1000 Growth | ~0% |

| Russell 2000 Value | ~12% |

| Russell 2000 Growth | ~8% |

*Source: Miller Value Partners, Q1 2026 Investor Letter *

### Why Now?

J.P. Morgan analysts point to a confluence of cyclical, secular, and structural tailwinds turning the tide for value stocks in 2026 .

**Cyclical:** The economy remains resilient. The May jobs report showed 80,000 new jobs added and unemployment holding steady at 4.3%. Strong economic momentum provides support to cyclical sectors like financials and industrials.

**Secular:** Sentiment may have soured on AI innovators, but AI demand itself is not slowing. The beneficiaries of massive AI capital expenditure—industrials and materials companies that build the infrastructure—have led the market this year. This isn't a rotation *out* of AI, but rather *into different parts* of AI .

**Structural:** The policy backdrop is favorable from both a fiscal and monetary perspective. Corporate tax changes may incentivize capital expenditure today, coinciding with the AI capex boom. A more pro-business climate, coupled with lower rates, has spurred capital markets activity, benefiting financials that facilitate this activity. Last year was a record year for North American M&A, and the IPO pipeline is robust for 2026-2027 .

### The "Boring" Beautiful

The Dow's record-breaking rally is being driven by sectors that had been left for dead: financials, healthcare, and consumer staples .

UnitedHealth (+5.20%) was the top-performing Dow component on Thursday and the largest contributor to the index's point gain . Goldman Sachs (+4.93%), JPMorgan (+3.64%), and American Express (+4.41%) provided the financial firepower . Even traditionally defensive stocks such as Walmart and Procter & Gamble traded higher, reinforcing the view that buying interest is widespread .

This is not a "risk-off" move. It is a **sector rotation**. Investors are not abandoning stocks; they are shifting money from one sector into another without reducing overall risk exposure .

**The Human Touch:** For the investor who has watched their tech-heavy portfolio stagnate while the Dow soars, the message is clear: diversification is not just a buzzword. It is the only free lunch in investing. The "Magnificent Seven" trade worked for three years. It may not work for the next three.

## Part 2: The 5 Best Value Stocks to Buy Now

Based on recent analyst reports, insider buying activity, and the sectors leading the Dow's rally, here are five value stocks worth considering as the Great Rotation unfolds.

### 1. Goldman Sachs (GS): The Financial Engine

Goldman Sachs surged nearly 5% on Thursday and was among the biggest contributors to the Dow's record close . The investment bank is a direct beneficiary of the resurgent capital markets activity.

**Why Value?** Financials are trading at historically low valuations relative to the broader market. Goldman's P/E ratio is approximately 15x forward earnings—significantly cheaper than the S&P 500's 22x multiple.

**Options Strategy:** Consider a **bullish call spread**. If you believe the capital markets rebound has legs, selling an out-of-the-money call against a purchased call can reduce your cost basis while still providing upside exposure. Given Goldman's beta of 1.4, options premiums are elevated but manageable.

**The X-Factor:** The IPO pipeline for 2026-2027 is robust . As a top underwriter, Goldman stands to collect substantial fees regardless of whether the IPOs succeed or fail.

### 2. UnitedHealth Group (UNH): The Healthcare Anchor

UnitedHealth was the top-performing Dow component on Thursday, gaining 5.2% . The healthcare giant is a classic "defensive" stock that also offers growth.

**Why Value?** Healthcare is historically resilient during periods of economic uncertainty. UnitedHealth's forward P/E of approximately 19x is reasonable for a company with consistent double-digit earnings growth. The company also offers a dividend yield of around 1.5%.

**Options Strategy:** Given the low volatility of healthcare stocks, **covered calls** are an effective strategy. If you own UNH shares, selling out-of-the-money calls can generate additional income. The implied volatility for UNH options is currently below its historical average, making this a favorable environment for call sellers.

**The X-Factor:** UnitedHealth is the largest private insurer in America. As healthcare costs continue to rise and the population ages, the company's pricing power remains formidable.

### 3. JPMorgan Chase (JPM): The Banking Bellwether

JPMorgan rose 3.64% on Thursday and has been a consistent performer throughout the year . As the largest U.S. bank by assets, it is a proxy for the health of the financial system.

**Why Value?** JPMorgan trades at approximately 12x forward earnings and offers a dividend yield of nearly 2.5%. The bank's return on equity consistently exceeds 15%, a testament to its operational efficiency.

**Options Strategy:** **Cash-secured puts** are an attractive way to acquire JPM shares at a discount. If you are willing to buy the stock at a lower price, selling puts generates immediate income. With volatility elevated due to the uncertain rate environment, put premiums are attractive.

**The X-Factor:** JPMorgan's massive scale gives it advantages that smaller banks cannot match. Its investment banking division is a primary beneficiary of the M&A and IPO boom.

### 4. Coca-Cola (KO): The Timeless Consumer Staple

Coca-Cola is a Motley Fool favorite for 2025 and beyond . The beverage giant has raised its dividend for an astonishing 62 consecutive years .

**Why Value?** Coca-Cola's forward P/E of approximately 20x represents a 12% discount to its average forward P/E over the trailing five-year period . The dividend yield is 2.8%, and the company has ongoing operations in every country except Cuba, North Korea, and Russia .

**Options Strategy:** Coca-Cola's low beta (approximately 0.6) makes it ideal for **conservative covered call writing**. The stock moves slowly, allowing you to sell calls with high probabilities of success. The implied volatility for KO options is typically low, but the consistent premium income adds up over time.

**The X-Factor:** Kantar's "Brand Footprint" report has labeled Coca-Cola the most-chosen brand from retail shelves for 12 consecutive years . That kind of brand loyalty is a moat that competitors cannot easily cross.

### 5. Meta Platforms (META): The AI Value Play

Meta is the only "Magnificent Seven" stock that belongs on a value list. According to a recent Nasdaq analysis, Meta trades at a forward P/E of just **19 times**—one of the cheapest growth stocks in the market .

**Why Value?** Despite Meta's strong revenue growth—including 33% last quarter—the stock has underperformed this year as investors fret over AI infrastructure spending . The selloff has created an attractive entry point.

**Options Strategy:** Given Meta's higher volatility (beta around 1.2), **put credit spreads** are a more conservative way to gain exposure. By selling an out-of-the-money put and buying a further out-of-the-money put, you define your risk while collecting premium.

**The X-Factor:** Meta's business is a "perfect flywheel for AI," according to analysts . The company uses AI to improve its recommendation engine, keeping users on its apps longer. At the same time, it provides advertisers with AI tools that improve targeting. This creates a virtuous cycle that competitors cannot easily replicate.

| Stock | Sector | Forward P/E | Dividend Yield | Options Strategy |

| :--- | :--- | :--- | :--- | :--- |

| **Goldman Sachs (GS)** | Financials | ~15x | 2.2% | Bullish Call Spread |

| **UnitedHealth (UNH)** | Healthcare | ~19x | 1.5% | Covered Calls |

| **JPMorgan Chase (JPM)** | Financials | ~12x | 2.5% | Cash-Secured Puts |

| **Coca-Cola (KO)** | Consumer Staples | ~20x | 2.8% | Covered Calls |

| **Meta Platforms (META)** | Technology | ~19x | 0.4% | Put Credit Spread |

*Source: Analyst estimates, company filings*

## Part 3: The Value Legend – Bill Miller's Latest Picks

When value investors need guidance, they look to Bill Miller. The legendary investor, who beat the S&P 500 for 15 straight years at Legg Mason, recently made two notable additions to his Miller Value Partners "Deep Value" strategy .

### Bloomin' Brands (BLMN): The Turnaround Story

Bloomin' Brands, the parent company of Outback Steakhouse and Carrabba's Italian Grill, has been in a downward spiral for years. The stock has posted an average annualized return of **-28%** over the past five years and now trades at about $6.00 per share .

**The Value Case:** The stock is trading at about **6 times forward earnings** and 80% below its all-time high . Activist investor Starboard Value took a 9% stake two years ago and installed a new CEO focused on executing a turnaround plan: enhancing the balance sheet, investing in technology, streamlining operations, and remodeling Outback restaurants .

Miller's team sees the potential for $500 million in adjusted EBITDA, up from the current $270 million. They believe the upside could be "multiples of the current share price" .

**The Risk:** Rising beef costs and adverse weather are pressuring margins. But as Miller notes, that risk is already baked into the depressed share price.

### Crescent Energy (CRGY): The Oil and Gas Play

Crescent Energy is an oil and gas exploration company trading at **8 times forward earnings** . Unlike Bloomin' Brands, Crescent stock has been surging, up 61% year-to-date, spurred by rising oil and gas prices.

**The Value Case:** Miller notes management's history of buying discounted assets. The acquisition of Vital Energy added debt but also brought Crescent into the Permian Basin in Texas—one of the most productive oil fields in the world .

**The Risk:** Oil prices are volatile. If the Iran war resolves and oil drops back to $70, Crescent's profits will be squeezed. But with the Strait of Hormuz still closed and Brent crude near $100, the near-term tailwinds are strong.

**The Human Touch:** Bill Miller is not a trader. He is a "deep value" investor with a multi-year time horizon. When he buys a stock trading at 6 times earnings, he is willing to wait years for the market to recognize its value. That patience is the essence of value investing—and it is a quality that is in short supply in the age of meme stocks and 24-hour news cycles.

## Part 4: The Options Playbook – How to Trade the Rotation

The Great Rotation creates opportunities not just for stock pickers, but for options traders. Here are three strategies to consider.

### Strategy 1: The "Value Spread" (Sell Growth, Buy Value)

As the rotation out of tech and into value continues, options on growth stocks are becoming expensive (high implied volatility), while options on value stocks remain relatively cheap.

**The Trade:** Sell out-of-the-money call spreads on overvalued tech names (like Nvidia or Broadcom) and use the premium to buy at-the-money call spreads on value names (like Goldman Sachs or UnitedHealth).

**Why It Works:** The market is pricing in continued volatility for tech. By selling that volatility, you collect premium. By buying value, you position for the rotation.

### Strategy 2: The "Dividend Capture" (Covered Calls on Staples)

Consumer staples like Coca-Cola and Procter & Gamble offer attractive dividends and low volatility—making them ideal candidates for covered call writing.

**The Trade:** Purchase 100 shares of KO (approximately $7,200) and sell a call option 5-10% out of the money with 30-45 days to expiration.

**Why It Works:** The dividend provides a floor, and the call premium generates additional income. Even if the stock rises slowly, you capture both the dividend and the option premium.

### Strategy 3: The "Value Protection" (Put Credit Spreads)

If you believe the rotation into value will continue but want to limit your risk, put credit spreads offer defined-risk exposure.

**The Trade:** Sell an out-of-the-money put on JPM (say, the $180 strike) and buy a further out-of-the-money put (the $170 strike). Collect the net premium.

**Why It Works:** As long as JPM stays above $180, you keep the premium. If it falls, your loss is limited to the width of the spread minus the premium collected.

**The Human Touch:** Options trading is not for everyone. The leverage can amplify losses as easily as gains. If you are new to options, start small. Use defined-risk strategies. And never risk more than you can afford to lose.

## Part 5: The Risks – Why the Rotation Could Reverse

No investment thesis is without risks. Here are three factors that could derail the Great Rotation.

### Risk 1: The Fed Hikes Rates

The market is now pricing in an 85% probability of a rate hike by the end of 2026 . While financials benefit from higher rates (they can charge more for loans), the broader economy could suffer. A recession would hurt value stocks as much as growth stocks.

### Risk 2: The Iran War Escalates

The ceasefire is fragile. Oil prices have climbed for three consecutive sessions as Iran-backed Hezbollah rejected the new truce . If the Strait of Hormuz remains closed through the summer, oil could spike to $150, triggering a market selloff across all sectors.

### Risk 3: AI Makes a Comeback

The AI trade has been written off before—only to roar back. If Nvidia announces a breakthrough at its developer conference, or if OpenAI unveils GPT-5 with capabilities that justify the hype, money could flow back into tech just as quickly as it left.

**The Human Touch:** Market timing is impossible. The Great Rotation could last six months or six weeks. The key is not to predict the timing—but to position your portfolio so that you benefit regardless of which sector leads.

## Frequently Asked Questions (FAQ)

**Q: Why is the Dow hitting record highs while the Nasdaq lags?**

A: The Dow is composed of industrial, financial, and healthcare giants that are benefiting from a resilient economy and a rotation out of overvalued tech stocks. The Nasdaq is heavily weighted toward AI and semiconductor names that have become overextended .

**Q: Is the AI bubble popping?**

A: Not necessarily. J.P. Morgan analysts argue that this is a "rotation into different parts of AI" rather than a rejection of AI altogether . Companies that build AI infrastructure—industrials, materials, and energy—are still performing well.

**Q: What is the best value stock to buy right now?**

A: According to recent analyst reports, Meta Platforms offers the best combination of growth and value, trading at just 19 times forward earnings despite 33% revenue growth . For more conservative investors, Coca-Cola offers a 62-year dividend streak and a reasonable valuation .

**Q: How can I profit from the Great Rotation using options?**

A: Consider selling out-of-the-money call spreads on overvalued tech names and using the premium to buy call spreads on value names. Alternatively, sell cash-secured puts on financials like JPMorgan to acquire shares at a discount .

**Q: Should I sell my AI stocks?**

A: (Disclaimer: Not financial advice.) That depends on your time horizon and risk tolerance. If you are a long-term investor, the AI trend is likely still intact. But if you are heavily concentrated in a few high-flying names, consider rebalancing into value sectors to reduce risk.

**Q: What is Bill Miller buying?**

A: Bill Miller's Miller Value Partners recently added Bloomin' Brands (Outback Steakhouse) and Crescent Energy (oil and gas) to its Deep Value strategy. Both trade at single-digit P/E ratios .

## Conclusion: The Boring Are Beautiful Again

We started this article with a record-breaking Dow and a stumbling Nasdaq. We end with a recognition that the market's center of gravity is shifting.

For three years, the story was simple: buy AI, ignore everything else. That story is not over—but it is evolving. The Magnificent Seven are no longer the only game in town. Financials, healthcare, and consumer staples are suddenly stealing the spotlight.

The Great Rotation is not a prediction. It is a fact. The money is moving. The question is whether you are positioned to benefit.

**For the Aggressive Investor:**

Consider put credit spreads on JPMorgan or call spreads on Goldman Sachs. The financial sector has momentum, and options premiums are attractive .

**For the Conservative Investor:**

Coca-Cola and Johnson & Johnson offer dividends and stability. Covered calls can generate additional income while you wait for the stocks to appreciate .

**For the Value Seeker:**

Look at Bloomin' Brands. The stock is trading at 6 times earnings and 80% below its all-time high. The turnaround is risky, but the reward could be substantial .

**The Bottom Line:**

The Dow is at record highs. The Nasdaq is struggling. The Great Rotation is here.

The boring are beautiful again. And the smart money is rotating in.

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**#DowJones #ValueStocks #OptionsTrading #GreatRotation #BillMiller #Investing #StockMarket**

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*Disclaimer: This article is for informational purposes only. It does not constitute financial or investment advice. Options trading involves significant risk and is not suitable for all investors. Always consult a licensed professional before making investment decisions.*