Undervalued U.S. Equities in January 2026: A Strategic Entry Opportunity for Long-Term Investors

The stock market's cyclical nature often creates windows of opportunity for value investors, and early 2026 appears to be one such inflection point. Three industrials-Fortune Brands Innovations (FBIN), Hexcel (HXL), and V.F. Corporation (VFC)-stand out as compelling candidates for long-term investors seeking undervalued equities with robust earnings growth trajectories. Discounted cash flow (DCF) analyses and forward-looking projections suggest these companies are trading meaningfully below intrinsic value, offering asymmetric risk-reward profiles as the new year unfolds.

Fortune Brands Innovations (FBIN): A Re-rating Catalyst in the Making

FBIN's recent earnings report, which saw Q3 2025 EPS of $1.09 miss the $1.10 consensus estimate, has created a short-term discount despite a strong long-term outlook. Analysts now project FY 2026 revenues to reach $4.65 billion, a 3.5% year-over-year increase, with per-share earnings expected to surge 53% to $4.16. A DCF model from ValueInvesting.io estimates a fair price of $68.62, implying a 24.8% upside from its current $55.00 level. This premium reflects not only earnings momentum but also the company's ability to navigate macroeconomic headwinds while maintaining pricing power in its premium home and lifestyle segments.

V.F. Corporation (VFC): Margin Expansion and Tariff Resilience

VFC's Q2'26 results underscored its operational resilience, with adjusted operating income ranging between $275 million and $305 million. The company's full-year 2026 guidance anticipates free cash flow growth despite elevated tariffs, a testament to its disciplined cost management and brand strength. While DCF valuations for VFC are less explicitly detailed in recent reports, the company's consistent capital allocation strategy-prioritizing dividends and share repurchases-positions it as a defensive play in a volatile market. Investors who prioritize cash flow visibility and sector diversification may find VFC's current valuation attractive, particularly as it leverages its portfolio of lifestyle and outdoor brands to drive margin expansion.

Hexcel (HXL): Aerospace Recovery and DCF Discrepancies

HXL presents a more nuanced case. Its Q3 2025 results- $456 million in net sales and $0.37 in adjusted diluted EPS-highlight operational stability in a challenging environment. Analysts project 2026 earnings to jump 29.44% to $2.77 per share, driven by aerospace production rate increases. DCF valuations, however, are mixed: Simply Wall St estimates a fair value of $95.34 (23.4% upside from $73), while Alpha Spread's $52.44 fair value suggests overvaluation. These discrepancies reflect divergent assumptions about aerospace demand and margin normalization. Yet, with Jefferies raising its price target to $75 on 2026 outlook optimism, and Webull's $105.82 fair value estimate indicating a 40% upside, the consensus leans toward undervaluation. HXL's current price of $76.65 appears to balance these extremes, offering a margin of safety for investors who believe in the long-term trajectory of the aerospace sector.

Conclusion: A Portfolio of Asymmetric Opportunities

The three equities discussed above share a common thread: they are trading below estimated fair value despite strong earnings growth forecasts. FBIN's re-rating potential, VFC's operational discipline, and HXL's aerospace tailwinds collectively form a diversified portfolio of value plays. For long-term investors, the key lies in aligning these investments with macroeconomic trends-such as housing recovery, lifestyle consumption, and aerospace production normalization-that are likely to drive earnings power in 2026 and beyond.

As always, investors should conduct their own due diligence, but the current discount to intrinsic value, coupled with robust forward-looking metrics, makes these names worthy of consideration for a January 2026 entry.