Ariel Investments backs Covista and financial stocks as small-cap rally broadens

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Ariel backs Covista, financials

Highlights

Covista shares have gained 20% year-to-date, driven by global healthcare worker shortages and improved business under CEO Stephen Beard.
Littelfuse and Knowles, both owned by Ariel Investments, have surged about 89% and 90% respectively this year amid the broadening small-cap rally.
Lazard and Carlyle Group shares, down 16% and 29% in 2026, are highlighted as undervalued financials trading at 9–11 times next year’s earnings.

Stock picks amid AI-driven volatility

As reported by CNBC, Rogers says the current market is being distorted by the artificial intelligence trade, creating unusual short-term volatility and leaving value investors under pressure as fast-rising technology names continue to climb.

Speaking on CNBC's "Power Lunch" from the trading floor of the Cboe in Chicago, he says the broader market looks expensive because of the AI craze and argues the trend could eventually end in a similar way to the internet bubble at the end of the century.

Among Ariel's preferred small-cap ideas, Rogers highlights Covista, a Chicago-based for-profit education company focused mainly on training doctors and nurses. He says the global shortage of nurses and doctors supports demand for the company's offering, and adds that CEO Stephen Beard has helped put the business on track with further upside still possible. Covista shares are up 20% this year.

Rogers also says Ariel owns Chicago-based electronics manufacturer Littelfuse and components producer Knowles. Their shares have risen about 89% and 90% this year, respectively.

Financial sector seen as undervalued

Rogers also identifies Lazard and Carlyle Group as attractive investments in the current macroeconomic backdrop, arguing parts of financial services have become exceptionally cheap even as dealmaking activity continues in a more deregulated environment.

Lazard shares are down 16% in 2026, while Carlyle has fallen 29% this year. Rogers describes Lazard as a premier investment banking company with a money management subsidiary, and praises CEO Peter Orszag as well as president and North America financial advisory co-head Ray McGuire for bringing fresh perspective and investment expertise.

On Carlyle, Rogers says the broader private equity sector is facing negative headlines that are weighing on sentiment, but he argues the stock now trades at a low valuation. He says companies in this part of the market are selling at roughly 9 to 11 times next year's earnings, levels he describes as historically very cheap, with value emerging in smaller and mid-sized financial services firms.

Bond ETF inflows in the U.S. have been accelerating as investors respond to equity-market volatility, persistent inflation concerns, and shifting expectations around the Federal Reserve. Our publication previously noted that demand has been concentrating in U.S. Treasuries and multi-sector income strategies, with real yields and inflation breakevens shaping how investors balance income generation against duration risk.

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