In this article, we will look at the 10 Best and Cheap Stocks to Buy Now.
On June 4 Morningstar released its June 2025 outlook, indicating that as of May 30, the US stock market was trading at a 3% discount to its fair value. This valuation was near the historic mid-point suggesting that the market was neither undervalued nor overvalued. David Sekera, CFA at Morningstar noted that in April the market experienced a drop to 17% discount to its fair value which the firm saw as a golden buying opportunity, thereby suggesting investors to overweight stocks. However, the market quickly rebounded after the 90-day pause, returning to market-weight positions.
Morningstar warns that the current calm in the market is like the “eye of the hurricane,” implying that despite recent stability, significant risks remain ahead. Key risks include ongoing uncertainties around trade tariffs and negotiations, which remain unresolved and could cause market volatility depending on news developments or geopolitical maneuvers. Additionally, economic growth is expected to slow over the coming quarters. The report highlights that the first quarter of 2025 showed a slight GDP contraction of around -0.3% due to pre-tariff surges. The second quarter GDP estimates remain strong however, analysts anticipate the growth rate to decelerate through the rest of 2025.
Based on the analysis Morningstar recommends investors overweight value stocks that are trading at a 14% discount to their fair value and underweight growth stocks that trade at a premium of 11% to their fair value.
With that let’s take a look at the 10 best and cheap stocks to buy now.
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Our Methodology
To curate the list of the 10 best and cheap stocks to buy now, we used the Finviz stock screener and Seeking Alpha. Using the screener we aggregated a list of stocks trading below the forward P/E of 15. Next, we cross-checked each stock for forward P/E from Seeking Alpha. Lastly, we ranked these stocks based on the number of hedge fund holders, sourced from Insider Monkey’s Q1 2025 database. Please note that the data was recorded on June 20, 2025.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
10 Best and Cheap Stocks to Buy Now
10. Shell plc (NYSE:SHEL)
FWD P/E Ratio: 11.58
Number of Hedge Fund Holders: 50
Shell plc (NYSE:SHEL) is one of the 10 Best and Cheap Stocks to Buy Now. On June 22, Reuters reported that Shell plc (NYSE:SHEL) led the LNG Canada project to produce its first LNG to export in British Columbia. The LNG Canada project is a joint venture led by Shell with partners including Petronas, PetroChina, Mitsubishi Corporation, and Kogas.
This is a notable event as this startup comes ahead of the projected milestone. The company had earlier notified that it remains on track to produce its first shipment by the middle of this year. The LNG Canada facility is recognized as the first large-scale project to begin production and is also significant due to its direct access from North America to the Pacific coast.
The sources of Reuters added the project can produce 14 million metric tones per annum when fully operational. The project’s Train 1 facility started the first production, which has a capacity of 5.6 million metric tones per annum. The sources added that LNG tanker Gaslog Glasgow is said to be approaching the Kitimat port and is anticipated to arrive on June 29 to be loaded with the first batch.
Shell plc (NYSE:SHEL) is a global energy and petrochemical company engaged in the exploration, production, refining, and marketing of oil, natural gas, and chemicals.
9. The Goldman Sachs Group, Inc. (NYSE:GS)
FWD P/E Ratio: 14.32
Number of Hedge Fund Holders: 77
The Goldman Sachs Group, Inc. (NYSE:GS) is one of the 10 Best and Cheap Stocks to Buy Now. On June 20, Citi analyst Keith Horowitz maintained a Neutral rating on The Goldman Sachs Group, Inc. (NYSE:GS) with a price target of $550. The rating comes as the firm released its Q2 2025 earnings preview note regarding the company.
The Goldman Sachs Group, Inc. (NYSE:GS) released its Q1 2025 earnings results on April 14. The company delivered net revenue of $15.06 billion, reflecting a 6% year-over-year increase. The net income for the quarter came in at $4.74 billion with an annualized ROTE of 18%. Analyst Keith Horowitz acknowledged that the company is managing its main initiatives effectively. He noted Q1 results to be indicative of a clear line of sight towards 15% to 17% ROTCE.
In addition, Horowitz also highlighted his bull case suggesting the ROTCE range to increase further. Despite the bullish scenario, he remains cautious as The Goldman Sachs Group, Inc. (NYSE:GS) is trading above its historic valuations. He believes that to consider the company’s share to be attractively priced investors would have to assume a ROTCE of more than 18% and a significantly reduced risk profile, which Horowitz sees to be too far.
8. AT&T Inc. (NYSE:T)
FWD P/E Ratio: 13.42
Number of Hedge Fund Holders: 87
AT&T Inc. (NYSE:T) is one of the 10 Best and Cheap Stocks to Buy Now. On June 18, UBS raised the price target on AT&T Inc. (NYSE:T) from $30 to $31 while maintaining a Buy rating on the stock. The increased price rating is based on the improved confidence in the company’s prospects and its strategic position in the competitive wireless market condition.
AT&T Inc. (NYSE:T) released its Q1 2025 results on April 23. The company grew its revenue to $30.6 billion, reflecting a 2% year-over-year increase. The growth was driven by higher Mobility and Consumer Wireless revenue. In addition, the company added 324,000 postpaid customers with a churn rate of 0.83%.
Looking ahead, management sees the Mobility Services revenue growing between the range of 2% to 3% for the full year. UBS notes that in Q2, wireless competition remained intense as carriers continued offering trade-in deals and switching promotions for most of the quarter. UBS believes the competitive environment is anticipated to result in higher gross additions and better subscriber churn rate.
7. Wells Fargo & Company (NYSE:WFC)
FWD P/E Ratio: 13.23
Number of Hedge Fund Holders: 88
Wells Fargo & Company (NYSE:WFC) is one of the 10 Best and Cheap Stocks to Buy Now. On June 18, Raymond James analyst David Long raised the price target on Wells Fargo & Company (NYSE:WFC) from $78 to $84 while keeping a Buy rating. The rating upgrade comes after the Federal Reserve on June 3 removed the limit on growth in total assets which it imposed in 2018.
Analyst Long believes the medium-to-long-term impacts of lifting this cap will be material, enabling Wells Fargo & Company (NYSE:WFC) to grow its balance sheet and benefit from higher trading and investment banking revenue. He also expects positive earnings per share revisions over the next month and a 4% increase in 2026 EPS. Wells Fargo & Company (NYSE:WFC)’s CEO Charlie Scharf described the removal of the asset cap as a pivotal milestone in the bank’s transformation journey.
Wells Fargo & Company (NYSE:WFC) is a financial services company with around $1.9 trillion in assets. Its services range from banking, investment, and mortgage products and consumer and commercial banking.
6. Johnson & Johnson (NYSE:JNJ)
FWD P/E Ratio: 14.12
Number of Hedge Fund Holders: 91
Johnson & Johnson (NYSE:JNJ) is one of the 10 Best and Cheap Stocks to Buy Now. On June 19, Johnson & Johnson (NYSE:JNJ) announced the launch of two new plating systems in the United States under its VOLT platform, called Distal Radius and Proximal Humerus 3.5 Plating Systems.
The systems are designed to treat the two most commonly fractured bones, which are the distal radius near the wrist and the proximal humerus near the shoulder. These injuries are common in people above 65 years old. Johnson & Johnson (NYSE:JNJ) designed these systems in collaboration with the Hand Expert Group from the AO Technical Commission. The new plate has a new shape that sits more distally on the bone fragments and has a less prominent profile to reduce soft tissue irritation, thereby improving the overall comfort and healing process.
Johnson & Johnson (NYSE:JNJ) highlighted that the systems fill in a critical gap in the current treatment of fractures. The systems are now readily available across the United States. Johnson & Johnson (NYSE:JNJ) is an international global healthcare company. The company operates through two segments including innovative medicine and MedTech.
5. Merck & Co., Inc. (NYSE:MRK)
FWD P/E Ratio: 8.88
Number of Hedge Fund Holders: 93
Merck & Co., Inc. (NYSE:MRK) is one of the 10 Best and Cheap Stocks to Buy Now. On June 18, Akash Tewari, an analyst from Jefferies, maintained the Buy rating on Merck & Co., Inc. (NYSE:MRK) with a price target of $138. The positive outlook is based on the stability of the company’s vaccine sales and the anticipated launch of a subcutaneous version of Keytruda.
There had been some speculations regarding the change in the number of vaccine doses by The Advisory Committee on Immunization Practices. This concerned Merck & Co., Inc. (NYSE:MRK) as a reduction in the number of Gardasil doses could have resulted in lower sales and vaccine revenue. However, analyst Akash Tewari noted that the upcoming ACIP meeting agenda does not include a discussion on HPV vaccine, implying that the speculated change is not coming anytime soon.
Moreover, Tewari anticipates the sooner-than-expected introduction of a subcutaneous version of Keytruda. The analyst believes that this will enable Merck & Co., Inc. (NYSE:MRK) to capture a greater market share and will drive the company’s revenue higher.
Merck & Co., Inc. (NYSE:MRK) is an international healthcare company that develops and sells prescription medicine, vaccines, and animal health products. It operates through two main segments including the Pharmaceutical and Animal Health Segment.
4. Bank of America Corporation (NYSE:BAC)
FWD P/E Ratio: 12.46
Number of Hedge Fund Holders: 117
Bank of America Corporation (NYSE:BAC) is one of the 10 Best and Cheap Stocks to Buy Now. On June 11, Wells Fargo analyst Mike Mayo maintained a Buy rating on the stocks with a price target of $56.
The analyst highlighted loan growth and improved net interest income as key drivers of enhanced profitability. Mike believes that despite the sluggish investment banking sector, Bank of America Corporation (NYSE:BAC)’s decade-long investments are expected to pay off thereby reinforcing its strategic positioning and growth potential.
Analyst Mike Mayo also noted that the bank has consistently grown its deposits driven by investments in bank renovations and market expansion. Bank of America Corporation (NYSE:BAC) reported its Q1 2025 results on April 15. It grew its revenue of $27.4 billion by 6% year-over-year, with net income growing 11% to reach $7.4 billion. As the analyst highlighted, the deposits for the quarter grew to approximately $2 trillion reflecting a 2% year-over-year increase. Lastly, Mike highlights the bank’s valuation as it is trading at the lower end of its historic forward P/E ratio.
3. Alibaba Group Holding Limited (NYSE:BABA)
FWD P/E Ratio: 11.45
Number of Hedge Fund Holders: 125
Alibaba Group Holding Limited (NYSE:BABA) is one of the 10 Best and Cheap Stocks to Buy Now. On June 23, the Wall Street Journal reported Alibaba Group Holding Limited (NYSE:BABA) is combining its food-delivery platform Ele.me and online travel services platform Fliggy to its core e-commerce business.
This is a strategic move that realigns the company’s resources towards its core revenue driver and develops a stronger delivery network. Alibaba Group Holding Limited (NYSE:BABA) has been facing serious competition from competitors like JD.com and Meituan, this move indicates that the company is fortifying its delivery network. Following the folding, the CEO of Ele.me and Fliggy will directly report to Jiang Fan, who leads Alibaba’s E-commerce Business Group.
The company in April also launched a new rapid delivery feature on its shopping platform, Taobao. “This marks a strategic upgrade as we evolve from an e-commerce platform into broader consumer-focused platform,” said Eddie Wu Yongming, Chief Executive of Alibaba Group Holding Limited (NYSE:BABA).
2. JPMorgan Chase & Co. (NYSE:JPM)
FWD P/E Ratio: 14.92
Number of Hedge Fund Holders: 129
JPMorgan Chase & Co. (NYSE:JPM) is one of the 10 Best and Cheap Stocks to Buy Now. On June 18, Ebrahim Poonawala from Bank of America Securities reiterated a Buy rating on JPMorgan Chase & Co. (NYSE:JPM) while increasing the price target from $300 to $325. The analyst based his rating on the strategic market position and growth potential of the company.
Ebrahim Poonawala noted the company is focused on enhancing customer relationships and expanding product offerings in deposits, credit cards, and wealth management. Moreover, the company is also embedding its banking services as part of consumers’ everyday activities, Poonawala believes this is expected to increase customer engagement and activity. The analyst also likes the cheap valuation of JPMorgan Chase & Co. (NYSE:JPM), citing that the discounted price does not reflect its dominant market position.
JPMorgan Chase & Co. (NYSE:JPM) released its Q1 2025 earnings results in April. The company grew its revenue by 8.05% year-over-year to reach $45.3 billion. In addition, the ROE and ROCTE remained strong at 18% and 21% respectively.
JPMorgan Chase & Co. (NYSE:JPM) is an international financial services company. It provides a range of banking and investment services to customers of all sizes.
1. UnitedHealth Group Incorporated (NYSE:UNH)
FWD P/E Ratio: 13.56
Number of Hedge Fund Holders: 139w
UnitedHealth Group Incorporated (NYSE:UNH) is one of the 10 Best and Cheap Stocks to Buy Now. On June 19, JPMorgan analyst Lisa Gill raised the firm’s price target on UnitedHealth Group Incorporated (NYSE:UNH) from $405 to $418, while keeping a Buy rating on the stocks.
Analyst Lisa Gill noted that the firm revised its price target after meeting with the management. JPMorgan expects UnitedHealth Group Incorporated (NYSE:UNH) to manage enrollment in Medicare Advantage as it sees the company exiting unprofitable plans in 2026. As a result, the analyst expects lower Medicare Advantage enrollment rates in 2025 and 2026.
Gill noted that if the company can reach the lower end of its 3% to 5% margin target range in this segment, it will provide a meaningful upside against the current earnings estimate. However, JPMorgan’s base case does not expect the company to reach that low-end margin target in 2026, although management has expressed that aspiration.
UnitedHealth Group Incorporated (NYSE:UNH) is a healthcare company that provides a range of health insurance and related products. It operates through two main segments including UnitedHealthcare and Optum.
While we acknowledge the potential of UNH to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than UNH and that has 100x upside potential, check out our report about this cheapest AI stock.
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Disclosure: None.
