The Covid-19 pandemic has punished already cheap value stocks and rewarded growth stocks with even higher premiums, creating a gap not seen since the tech bubble in 2000.

During a time of uncertainty, such as the market currently faces, investors usually flock to companies with higher visibility and internal growth, ignoring valuation, while leaving behind stocks that are more sensitive to the global economy. “The market is willing to pay higher and higher prices for visibility, growth and for comfort, which made growth stocks rise even higher,” Brent Fredberg, an analyst at Brandes Investment Partners LP told Bloomberg in a phone interview.

In fact, the strong negative reactions in the equity markets from the pandemic, followed by a big rally, made crowded growth stocks even more expensive, further punishing value stocks. “Fundamental developments have been similar for each group, yet the ones that people already liked beforehand are actually up year-to-date, and thus are not only camouflaging the poor treatment of the value names, but holding up the broader index,” said Drew Dickson, co-founder and chief investment officer of Albert Bridge Capital.

The gap between the MSCI World Growth Index and the MSCI World Value Index is at an all-time high. The last time such a large gap was evident was right before the 2000 tech bubble, after which investors eventually returned to value stocks.

The difference is stark when looking at U.S. market indexes, Goldman Sachs Managing Director Ben Snider said. “The distribution of valuation multiples across U.S. companies is now the widest on record outside of the peak of the Tech Bubble,” he wrote in a May note to clients. And historically extended periods of outperformance by the most expensive stocks usually ended when economic growth improved, leading cheaper and low-valuation stocks to catch up with the expensive ones, he added.

This disparity has helped create some attractive opportunities for value-oriented, longer-term focused money managers such as the San Diego-based Brandes Investment, which manages about $17 billion in assets. “This really gives us opportunity to purchase some of the leading and well-positioned companies that are economically sensitive, therefore discounted currently at very attractive prices,” Fredberg said.

Fredberg is seeing opportunities within value stocks, in financials, industrials and oil-related energy companies. Within financials, some of the money-center banks are trading as cheaply as they were in the 2008 financial crisis, although now they “don’t even resemble the banks during the crisis.” Some industrial stocks that have great balance sheets and are industry leaders, have been “overly discounted,” he said. And within the energy sector, he is seeing opportunities among the integrated companies, especially those in Europe. Moreover, he wouldn’t be surprised to see more deals within value stocks, specifically among energy companies taking advantage of potential bankruptcies and fire sales.

Still, there’s a view that value stocks will likely to continue to be punished until investors are more comfortable with the global economy. Some potential catalysts for a rotation back into value or cheaper stocks would include positive news on a Covid-19 vaccine, more re-openings and manageable virus infection cases, said Fredberg. However, there is likely to be more pain in the short-term as “right now [the] market has become very short sighted and taking the directional impact of what’s going on, too far in either direction,” Fredberg said.

So to invest in value, investors need to be willing to take on risk to find long-term reward. Historically, this type of value dispersion yielded a “strong signal” for future outperformance for cheaper stocks, but the valuation gap “has not been a good indicator of the timing of this reversal,” Goldman’s Snider said. “Investors focused on relative returns should consider adding to positions in low valuation stocks, but only if they have long investment horizons and high tolerance for drawdowns along the way,” he added.

This article was provided by Bloomberg News.