Should I buy growth or value stocks in 2026?

The headline of this article is a common one in financial journalism, pitching value shares against growth stocks. But is this the right mindset to have as an investor? And if so, which style should I favour next year? Here are my thoughts.

The great divide

In simple terms, growth stocks are companies expected to expand earnings rapidly. Investors are paying up for future growth potential. Value shares, on the other hand, are those trading below what they seem worth, and are often mature firms with steady cash flow, dividends, and much lower expectations baked in.

The growth versus value debate is one of the oldest in investing. The style dichotomy is popular because we humans love neat categories (light versus dark, good versus bad, winner versus loser). Our brains are hardwired to simplify complexity.

The debate can also sometimes turn tribal (another relic of our evolutionary past). Boiled down, some in the growth camp see value investors as boring, while value purists view growth investing as little more than speculation (or downright naïve).

Too simplistic

My view is that the divide is too simplistic, and not being wedded to a particular style can result in far better overall returns. 

For example, I only used to invest in what would commonly be described as growth stocks. But in 2021, when these types of shares went bananas and were trading at ridiculous levels, I started to widen my horizon. 

Since then, some of my best-performing stocks have been what might be considered ‘boring’ companies from the FTSE 100. Shares such as Rolls-Royce, BAE Systems, Games Workshop, and HSBC. 

Aviva

One stock that has been a particularly pleasant surprise is Aviva (LSE:AV.). Before I started digging into the insurer, I was bearish because the company had long struggled to build any lasting shareholder value. 

Looking back, my starting assumption was that Aviva was probably a value trap. However, I soon saw a company that had sold off its low-returning overseas businesses and was doubling down on asset-light areas in profitable core markets (UK, Ireland and Canada). 

Its sprawling global footprint had actually acted as an anchor, and with a narrower focus under strong management, I thought Aviva was in notably better shape than it was a few years prior. 

I found the rock-bottom earnings multiple and ultra-high dividend yield very attractive. The evidence before my eyes was that the stock was a strong turnaround candidate, so I added it to my portfolio.  

Aviva has returned 41% year to date, excluding dividends, far outpacing the FTSE 100. 

Is Aviva stock still worth a look? I think it is. The valuation’s quite low and there’s a forecast 6.2% dividend yield on offer.

Moreover, the acquisition of rival Direct Line further extends Aviva’s reach into asset-light areas (motor, home, pet insurance, etc). Of course, big acquisitions like this can add risk, as the planned cost synergies might never materialise.

However, management says the integration’s going well, setting the combined group up for strong future growth.

Foolish takeaway for 2026

I bring up Aviva not to brag, but to show that challenging assumptions (or negative bias) around a business can work out well.

As we move into 2026, I’ll continue to look for wealth-building opportunities, wherever they appear in the stock market.

The post Should I buy growth or value stocks in 2026? appeared first on The Motley Fool UK.

More reading

• As the UK economy wobbles, now’s the perfect time to think about a second income
• The Aviva share price has soared – but is the real growth story still ahead?
• By 2026, these FTSE 100 stocks could yield above 6.3%
• £20,000 of Aviva shares could make me £10,390 a year in dividend income, given its 6.7% forecast yield!
• How big does your ISA need to be to target an £888 monthly passive income?

HSBC Holdings is an advertising partner of Motley Fool Money. Ben McPoland has positions in Aviva Plc, BAE Systems, Games Workshop Group Plc, HSBC Holdings, and Rolls-Royce Plc. The Motley Fool UK has recommended BAE Systems, Games Workshop Group Plc, HSBC Holdings, and Rolls-Royce Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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