Value stocks dramatically underperformed growth stocks during the last bull market. Growth equities benefited from low interest rates; high levels of innovation in tech, telecom, and biotech, and supercharged earnings. 

But value stocks have been making a comeback of late. Over the past 17 months, investors have circled back to undervalued equities in response to higher interest rates, a slowing global economy, and geopolitical unrest.

Here are three top value stocks that could deliver market-beating returns for investors in 2023 and beyond.  

Graph of cost versus value.

Image source: Getty Images.

1. AT&T 

AT&T (T -1.22%) is the third-largest wireless carrier in U.S. behind Verizon and T-Mobile. Even so, the company's shares have dramatically lagged the broader markets over the past 10 years, due to its decision to take on a tremendous amount of debt in an attempt to build out a media empire. Since carving out its DirecTV and WarnerMedia segments over the prior two years, however, AT&T's stock has started to rebound.

The bottom line is that AT&T's decision to refocus on its core telecom business through heavy investments in a 5G wireless network, and a fiber network capable of reaching roughly a quarter of all U.S. homes, has stabilized its long-term growth trajectory

Why is AT&T a top value stock to buy now? A few reasons. First off, it offers shareholders a ginormous annualized dividend yield of 5.45% at current levels. Second, the company's shares are presently trading at under 8 times forward earnings, which is a bargain for a large-cap dividend stock. Lastly, Wall Street analysts think this stock might be undervalued by as much as 25% right now.  

2. Cresco Labs

Cresco Labs (CRLBF -1.76%) is a top-tier U.S. cannabis company. While marijuana stocks are normally considered growth plays, Cresco stock is undeniably in value territory after its beeline move lower over the past few years.

In fact, its shares might be trading at less than 0.40 times 2024 sales right now. Although cannabis stocks have been suffering from a spate of industry-specific headwinds, Cresco's shares have arguably fallen way too far at this point. 

What's the investing thesis? Cresco is poised to officially merge with Columbia Care in the first quarter of 2023. This landmark transaction will give the combined entity a commercial presence in 18 states, and a leading market position in 7 of the 10 largest U.S. cannabis markets by 2025. This move, in effect, should shore up Cresco's long-term future as a leading cannabis company in the high-value U.S. market. 

All told, Cresco stock should be poised for a sharp rebound at some point in the near future. The company simply has too many growth drivers to remain this deeply undervalued for much longer. 

3. Target

Target (TGT -1.01%) stock slid by an unsightly 35% in 2022. The retailer's shares crumbled last year over inflationary pressures, fears of an economic slowdown, and fierce competition from Amazon and Walmart.

Target's shares, however, have charged higher with the change in the calendar year. At the time of this writing, the company's stock has gained a noteworthy 18.9% so far this year.

TGT Chart

TGT data by YCharts.

Why are investors circling back to this beaten-down retail stock? Target offers shareholders an intriguing mix of reliable passive income, a long track record of dividend raises, a compelling valuation, and fairly strong long-term growth prospects. Target stock, in fact, might be trading at a paltry 1.48 times 2025 sales right now. 

In short, Target's newfound upward momentum probably won't wear off anytime soon.