In this article, we will look at the 10 Best Performing Affordable Stocks Under $40.
On January 14, Liz Ann Sonders from Charles Schwab appeared on a CNBC Television interview to discuss the market volatility, broadening out themes, and more. She calls the current volatility a market pause period after 2 years of robust gains. She highlighted that one of the key trends for 2026 is the broadening of the tech sectors. Sonders noted that broadening out themes has legs, and the sectors under focus are international equities and small caps. However, she highlighted that within small caps, she is looking at quality small-cap stocks that have been profitable. Sonders also noted that the cyclical segments of the market, including materials and industrials, also look good for investment in 2026.
Sonders added that these sectors are expected to perform well, but not in a linear fashion. She elaborated that, as most experts expect volatility, this suggests that 2026 is a stock picker’s market. Unlike previous years, when investors could invest blindly in cohorts like “Mag 7” or sectors like tech and healthcare, the current market demands a more active approach of selecting quality stocks from each sector.
With that, let’s take a look at the 10 Best Performing Affordable Stocks Under $40.
Stocks chart
Our Methodology
To curate the list of 10 Best Performing Affordable Stocks Under $40, we used the Finviz stock screener, Seeking Alpha, and Insider Monkey’s Q3 2025 database. Using the screener, we aggregated a list of stocks trading below $40, with a forward P/E ratio of under 15, and that have gained more than 35% over the past 6 months. Next, we cross-checked the price, valuation, and performance from Seeking Alpha and ranked the stocks in ascending order of the number of Hedge Funds. Please note that the data was recorded on January 12, 2026.
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 427.7% since May 2014, beating its benchmark by 264 percentage points (see more details here).
10 Best Performing Affordable Stocks Under $40
10. Banco Bilbao Vizcaya Argentaria, S.A. (NYSE:BBVA)
Price: $23.58
Forward P/E Ratio: 11.74
6-month Performance: 47.65%
Number of Hedge Fund Holders: 12
Banco Bilbao Vizcaya Argentaria, S.A. (NYSE:BBVA) is one of the Best Performing Affordable Stocks Under $40. On January 9, Antonia Reale from Bank of America Securities reiterated a Buy rating on the stock and raised the price target from EUR21 to EUR24.3. Earlier on January 5, Citi also reiterated a Buy rating on Banco Bilbao Vizcaya Argentaria, S.A. (NYSE:BBVA) and raised the price target from EUR21 to EUR21.5.
Analysts from BofA noted the bank has “enviable quality franchise with solid market shares” in Mexico, Türkiye, and Spain, supported by a $133.7 billion market cap. He added that the bank generates around 60% profit from Mexico, which is expected to rise further by the USMCA trade agreements, boosting near-shoring despite ongoing volatility. Moreover, the firm also expects the bank to see significant growth in Türkiye. The profits from Türkiye are expected to triple by 2028, despite the higher provisions.
Lastly, BofA noted that Banco Bilbao Vizcaya Argentaria, S.A. (NYSE:BBVA) trades at a discount to peers and its fair value, achieving around 22% return on tangible equity (ROTE) alongside anticipated share buybacks.
Banco Bilbao Vizcaya Argentaria, S.A. (NYSE:BBVA) is a Spain-based multinational bank offering diversified financial services, including retail and wholesale banking, asset management, private banking, and insurance.
9. Emergent BioSolutions Inc. (NYSE:EBS)
Price: $13.36
Forward P/E Ratio: 6.52
6-month Performance: 82.26%
Number of Hedge Fund Holders: 19
Emergent BioSolutions Inc. (NYSE:EBS) is one of the Best Performing Affordable Stocks Under $40. On January 8, Emergent BioSolutions Inc. (NYSE:EBS) announced receiving an order worth up to $21.5 million from the US Department of War.
Management noted that the order entails the supply of BioThrax, which is the company’s primary product for anthrax protection, primarily for military personnel at high risk of exposure. Deliveries are expected to occur throughout 2026 with a one-year base period and optional extensions into 2027 and 2028. Management also highlighted that BioThrax remains the only FDA-approved anthrax vaccine, and the latest order aligns with the company’s ongoing role in providing vaccines for US defense needs against biological threats.
That said, on the same day, Emergent BioSolutions Inc. (NYSE:EBS) announced its collaboration with PANTHER to fund the ongoing “MpOx Study in Africa, which is an Africa CDC-led trial testing potential treatments for Mpox. Safety data from the first 50 randomized patients were collected in December, and the trial was cleared to proceed without any issues. Management noted that this partnership positions the company in a high-demand area of Mpox preparedness amid ongoing outbreaks.
Emergent BioSolutions Inc. (NYSE:EBS) is a prominent life sciences company focused on providing solutions to public health threats, including opioid overdoses, infectious diseases, and biological threats.
