Regardless of what type of investor you are, I think we can all agree that the market has changed quite a bit in recent months. 

For years, the playbook was relatively simple, as the market mainly went into the Magnificent Seven, even though some valuations got really stretched in the space. That trade made sense, as investors who went the other way (into value) had a much harder time due to economic growth headwinds, interest rate challenges, and the fact that Big Tech with secular growth was truly the only game in town. 

However, as I wrote in a recent GNG article titled “The Great Rotation: Why The ‘Mag 7’ Stranglehold Is Breaking,” that era is over, at least for the time being. In that article, I discussed how the “maturity wall” isn’t a major risk anymore, how hyperscalers aren’t about software anymore, and how trillions of dollars are being pushed into hard assets and value sectors over the next few years. 

Essentially, the “AI trade” is becoming physical. 

Today, we’ll discuss this in greater detail, and I’ll share my GNG Research screener results with you, which yielded some highly interesting results. 

So, let’s get to it! 

The Macro Picture Shows A Closing Gap

The data is finally backing up my thesis. What we are seeing now is a massive convergence in earnings growth that the market hasn't fully priced in yet. In general, it’s good news for the market, whether you like tech or value. 

According to new data from BlackRock and Bloomberg, the earnings growth gap between the Mag-7 and the S&P 493 (that’s basically the rest of the index) is about to narrow to the smallest margin in years. While the Mag-7 are seeing normalizing growth rates, growth is still impressive at roughly 19% to 20% (down from 30%). Meanwhile, the rest of the market is seeing accelerating growth. 

In general, revenue growth is terrific, as the S&P 500 reported the highest revenue growth rate since 3Q22 in the last quarter of 2025 (see below). In fact, revenue growth is accelerating, which means broadening growth is happening in an accelerating trend:

And it’s expected to remain high!

Even without NVIDIA, S&P 500 earnings (not revenue) growth is still at 12%. 

Why is that? 

There are three good reasons for that:

• We are witnessing an industrial renaissance driven by AI power requirements. Estimates suggest data center power consumption could triple by 2030. This year, it seems the market woke up to that reality. We need more power. Without it, even the best microchips won’t work. 

• As central banks settle into a "hold" or slow-cutting cycle, the catastrophic refinancing risk that terrified investors in cyclical sectors has evaporated. With yields stable and potential dovish signals from key figures like Kevin Warsh, who is set to become the new Fed chairman, the "maturity wall" is no longer a reason to avoid cyclicals/small caps.

• The spread between growth and value remains very wide. In an environment where growth is broadening, it’s an easy choice for many to pick between an industrial trading at 12x earnings or a tech stock that trades at 30x. Even more interesting is that the cheaper stocks are often the winners from QE-like data center spending. 

Now, there are many ways to find good investments in this market. I did things a bit differently than I usually do.

The GNG Research Screener: Finding "Cyclical Value"

Over the past 12+ months, I have mainly stuck to my watchlist, which I built when cyclical growth was a hot mess. Now, I turned to our own GNG Research Terminal, which all subscribers can access. 

Needless to say, I wasn't looking for junk. I wanted high-quality, undervalued cyclical stocks that can withstand volatility but offer massive upside as this rotation accelerates. The screener allows us to filter specifically for these things, as it isolates companies with strong fundamentals that the broader market has overlooked.

Here’s what I looked for (I kept it really simple):

• Sectors: basic materials, energy, industrials, financials, financial services.

• Valuation: “Ultra Value Buy,” “Very Strong Buy,” and “Strong Buy.” 

• I went with a quality and safety score of at least 70 (for both)

• All picks have a net leverage ratio of less than 3.5x EBITDA. 

• Every company is listed in the U.S. and trades in USD. 

See? No rocket science. 

Here’s the full list:

Part 2 (I had to break up the list):

From this list, I’m highlighting three specific stocks that stood out to me. 

Verisk Analytics (VRSK) - An Industrial Data Player

Verisk is a “picks and shovels” play for the industrial sector, as it’s a leading data analytics provider for the insurance industry. It basically operates at the intersection of cyclical risk and secular data demand. It has a “Very Strong Buy” rating and a safety score of slightly more than 92.0. On top of that, it has a quality score of 84.1, which indicates high-quality and low financial risk. That’s a key first step. 

Moreover, with a Piotroski F-score of 8, its operational efficiency is improving. The best thing is that in an environment where insurance companies are increasingly dealing with complex risks (just think of climate change metrics), this data becomes increasingly trivial. 

For example, it just announced a new data-sharing collaboration with S&P Global Energy to integrate climate risk into the S&P Sustainable platform. And although its stock price screams disruption, this is the kind of business that is in a good spot to bounce back over time if it is able to further expand its moat and partnerships that large insurance companies depend on (they cannot just “vibe code.”)

The next one is very different. 

Newmont Corporation (NEM) - The Gold & Copper Giant

Newmont is never going to be disrupted by AI. That’s because it mines gold and copper.

The company has a Strong Buy rating and two major tailwinds, which are booming copper demand due to electrification demand (including AI data centers!) and rising demand from gold buyers like central banks, retail investors, and everyone looking to hedge themselves against geopolitical, monetary, and fiscal policy risks (there’s a long list of reasons). 

Last month, I wrote an in-depth article on copper. The article included the following quote:

You just can't own enough Copper. Billionaire Robert Friedland sums it up perfectly..... You people have no idea whatsoever what we’re facing.

“We’re consuming 30m tonnes of copper a year. Only 4m tonnes of which is recycled. That means to maintain 3% GDP growth, with no electrification, we have to mine the same amount of copper in the next 18 years as we mined in the last 10,000 years, combined. 

In the next 18 years, I’ve got to mine the same amount of copper as we mined the last 10,000 years. This is without any new electrification, without data centers, without solar and wind and the greening of the world economy. You people have no idea whatsoever what we’re facing.” - X/@TheGladiatorHC

The screener highlights a safety score of 99.03, which is exceptional for a basic materials company. This suggests that despite the cyclical nature of mining, Newmont’s financial health is rock solid. And, assuming broadening growth will further boost copper demand, these numbers could get much better. 

To me, NEM is a terrific buy on weakness and one of the best picks to have on one’s watchlist right now. 

Moreover, I will highlight other miners in the weeks and months ahead, as there’s a lot more to unpack in this fascinating industry. 

Waste Connections (WCN) - A Newcomer On My Watchlist

Waste Connections is a Canadian company that has a listing in the U.S. It has a safety score of 90.0 and a quality score of roughly 86.0. This is backed by a network that spans 46 U.S. states and 6 Canadian provinces. 

Its assets make it the third-largest waste company in North America, with a focus on secondary markets. This company operates an integrated solid waste services model that sets itself apart by focusing on secondary and rural markets where competition is lower, allowing for significant pricing power and higher margins. 

Essentially, the company's strategy is vertically integrated, which means it manages the entire waste lifecycle, from collection and transfer to disposal in its own 113 active landfills, which enhances operational control and reduces third-party disposal costs.

As a huge fan of the waste business due to secular growth and extreme resilience, I love it when these stocks are on sale. 

While all of these three companies are unique, I think they all make sense in their own way in this market and economic environment. 

Takeaway

The market is going through a structural rotation that investors cannot afford to ignore. As dramatic as that may sound, my point is that earnings growth is broadening, capital spending is fueling a rebound in “real economy” stocks, and new opportunities are presenting themselves.

Using our research terminal, I have identified three standout stocks in this environment.  Companies like Verisk, Newmont, and Waste Connections present different ways to benefit, including oversold tech, hard-asset mining, and defensive growth. 

I believe all of these companies have what it takes to beat the market and present opportunities for a wide range of investors. Both Verisk and Waste Connections are on my watchlist.