He pointed out that value stocks have been "outperforming consistently" for more than two weeks, the longest stretch this year. That follows 126 months of underperforming growth stocks, surpassing underperformance during the Great Depression for their longest slump ever, Lee said.

"When Value turns, it will ultimately be a monster inflection," Fundstrat co-founder Thomas Lee said in a note Friday.

But Wall Street got discouraged by multiple delays and controversies in the new administration, and investors turned toward high-growth technology stocks instead. Now value is regaining some momentum, with stocks of industrial and financial companies among the best performers this month.

On Friday, both Bank of America Merrill Lynch and Fundstrat issued reports touting value stocks such as financials and a stronger U.S. dollar, an investment strategy known as the reflation trade. It took off after President Donald Trump won the November election on the hope he would stimulate economic growth through tax reform, infrastructure spending and deregulation.

A popular post-election investment thesis that many have since abandoned appears to be returning.

Financial stocks remain the best performer in the S&P 500 since the election, up 27 percent from November to now. But they have fallen to seventh place this year with gains of just 9 percent for 2017. The growth stock sector of information technology is up nearly 25 percent this year as the top performer in the benchmark index.

After a disappointing few months, it's "time to revisit the reflation trade," BofAML's London-based investment strategist James Barty and his team wrote in a Friday note.

"Global growth remains strong and [the] Fed has reminded us rates can go up. We like rates, USD and equities higher into year end," Barty said.

On Wednesday, the Federal Reserve maintained its outlook for another interest rate hike this year and three hikes next year. The Fed also announced that next month it would begin reversing its massive bond purchase program begun during the financial crisis.

Fed rate hike outlook remains well above the market

Source: BofAML

"Rising interest rates [are the] ultimate tailwind for value investing,“ Lee said. He pointed out that "during periods of rising rates, Value generally has outperformed."

On Wednesday, the rate-sensitive climbed to its highest since 2008, while the benchmark U.S. 10-year Treasury yield rose to its highest since early August. The U.S. dollar index recovered from more than two-year lows to hit its highest since early September.

The greenback and Treasury yields traded slightly off those levels Friday.

Also helping the case for value stocks, the European Central Bank is moving away from an even more extreme stimulus, or quantitative easing, program than the Fed ever implemented, Lee said.

To be sure, it's uncertain whether the reflation trade will truly pick up.

"Skepticism of Value is high — hence, investor inflows into Growth could extend Growth's leadership," Lee said. "Value needs to demonstrate follow through — but the fact Value has outperformed 16 days-plus is a good sign."

Value sectors industrials and financials are two of the best performers in the S&P for September, while technology is the fourth-worst performer this month.

The lackluster performance of the bank stocks for much of this year is also a major reason why Barty expects them to recover soon.

"If rates have indeed seen their lows for the year then we think banks in particular can have a run," Barty said. "In a global context we prefer US banks as rates are likely to move faster in the US and regulatory reform is a bigger driver."