Value stocks are poised to outperform growth names as interest rates move slowly but steadily higher next year, analysts told CNBC on Wednesday.
This year has been a good one for just a few growth investors as growth stocks like Amazon, Netflix and Facebook rocket higher, said Patrick O'Shaughnessy, principal at O'Shaughnessy Asset Management. But a reversal is in the cards if history is any predictor of the future, he said on "Squawk Box."
The Fed is widely expected to raise interest rates from the current near zero to 1 to 1.25 percent over the next year. Value stocks have outperformed in 14 of the last 17 rate tightening periods, O'Shaughnessy said.
"This year has been the opposite story, where high-flying, high-expectations, very expensive companies have done well," he said. "If anything, next year during a period of rising rates, we would recommend people reposition towards value stocks."
The leadership of a few growth stocks this year has also made the broader market more expensive, and U.S. stocks now look pricey by historical norms, O'Shaughnessy said.