In this article, we will look at the 10 Cheap Small Cap Stocks to Invest In Now.
On December 4, Warren Pies, co-founder and strategist at 3Fourteen Research, appeared on CNBC’s “Money Movers” team to talk about the markets going into the end of 2025 and the outlook for 2026.
He stated that they are ending the year where they started, which is overweight equities and a pretty bullish outlook in general. While they haven’t published their official target for next year, their big picture view is that earnings are going to come in at a double-digit growth rate.
READ ALSO: 10 Best Low Volatility Large Cap Stocks to Invest In and 13 Best Large Cap Stocks to Invest in For the Long Term.
In addition, contrary to consensus expectations, he does not see multiple contractions next year. He stated that everyone looks at the average historic P/E ratio and assumes that the market is overweight, which is something he would push back against, saying that multiples, if anything, have modest expansion next year.
Putting all of this together shows a bullish 2026, according to Pies. His outlook does not see a recession, as he believes the economy is in a “muddle through” or “soft landing” environment. In addition, he expects three rate cuts from the Fed next year, and a “hawkish” cut at next week’s meeting. Pies also stated that he anticipates the 10-year yield curve to flatten in H1 2026 before steepening in H2 2026.
With these trends in view, let’s look at the best cheap small cap stocks to invest in now.
Our Methodology
We used Finviz to compile a list of small cap stocks with a forward P/E below 15 selected the top 10 with the highest number of hedge fund holders as of Q3 2025, sourcing the hedge fund sentiment data from Insider Monkey’s database. The list is sorted in ascending order of hedge fund sentiment.
Note: All data was recorded on December 4.
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 Cheap Small Cap Stocks to Invest In Now
10. Fidelis Insurance Holdings Limited (NYSE:FIHL)
Forward P/E: 10.1
Market Cap: $1.93 billion
Number of Hedge Fund Holders: 16
Fidelis Insurance Holdings Limited (NYSE:FIHL) is one of the best cheap small cap stocks to invest in now. On November 19, Goldman Sachs lifted the price target on Fidelis Insurance Holdings Limited (NYSE:FIHL) to $17 from $16.50 while keeping a Sell rating on the stock. The firm told investors that it updated its model after the company released its fiscal Q3 earnings report.
Fidelis Insurance Holdings Limited (NYSE:FIHL) released its fiscal Q3 2025 earnings on November 12, reporting gross premiums written of $797.5 million, reflecting a 7.5% growth compared to Q3 2024. Net income for the quarter was $130.5 million, or $1.24 per diluted common share, while operating net income was $126.8 million, or $1.21 per diluted common share.
Fidelis Insurance Holdings Limited (NYSE:FIHL) also reported that the gross premium written for the nine months ended September 30, 2025, reached $3.7 billion, reflecting a growth of 8.4% from the comparable period last year.
In addition to Goldman Sachs, UBS also raised the price target on Fidelis Insurance Holdings Limited (NYSE:FIHL) to $24 from $23 on November 17 and maintained a Buy rating on the shares.
However, on November 14, Keefe Bruyette slashed the price target on the stock to $23 from $24 while maintaining an Outperform rating on the shares. The firm told investors that the current share price of Fidelis Insurance Holdings Limited (NYSE:FIHL) undervalues the solid book value growth that it anticipates from accretive share repurchases and strong underwriting prospects.
Fidelis Insurance Holdings Limited (NYSE:FIHL) is a global specialty insurer that leverages strategic partnerships to provide tailored and innovative insurance solutions. The company’s operations are divided into the following segments: Insurance and Reinsurance.
9. Sylvamo Corporation (NYSE:SLVM)
Forward P/E: 13.6
Market Cap: $1.90 billion
Number of Hedge Fund Holders: 20
Sylvamo Corporation (NYSE:SLVM) is one of the best cheap small cap stocks to invest in now. Bank of America Securities analyst George Staphos reiterated a Buy rating on Sylvamo Corporation (NYSE:SLVM) on December 2 and set a $59 price target.
In a separate development, Sylvamo Corporation (NYSE:SLVM) announced on November 10 that its board of directors unanimously adopted a limited-duration shareowner rights plan for the protection of the interests and maximization of value for all shareowners, effective immediately. The rights plan was adopted after Atlas Holdings directed its two affiliated directors to resign, resulting in the termination of the 2023 cooperation agreement between Atlas and Sylvamo. Resultantly, after November 13, Atlas would not be subject to standstill restrictions under the cooperation agreement.
Sylvamo Corporation (NYSE:SLVM) reported that the rights plan is specially designed “to allow Sylvamo shareowners to realize the long-term value of their investment”, and it “reduces the likelihood that any person or group could gain control of the company through open market or private accumulation of Sylvamo shares without appropriately compensating shareowners for such control or providing the board sufficient time to make informed decisions”.
Applicable equally to all future and current shareholders, management reported that the rights plan was not adopted in response to particular proposals pertaining to the acquisition of partial or full control of the company, and is not intended to “deter or preclude the board from considering offers that are in the best interests of all shareowners.”
Sylvamo Corporation (NYSE:SLVM) is a paper company that manufactures uncoated freesheet for paper products, such as cut size and offset paper, and also markets coated unbleached kraft papers, pulp, and aseptic and liquid packaging board. Its operations are divided into the following geographical segments: Europe, Latin America, and North America.