On January 8, Nancy Prial, Co-CEO & Senior Portfolio Manager at Essex Investment Management, appeared on CNBC to suggest that she sees big 2026 upside beyond mega-cap tech. Amidst the current market dynamics, Prial emphasized that such volatility underscores the necessity of a well-diversified portfolio. She advised clients to maintain a balance between highly popular market areas and companies that have not been as favored, as this structure helps weather sudden market shifts. Furthermore, she suggested that headline risk is often temporary, drawing a comparison to the previous year’s tariffs, and should be viewed as an opportunity to layer into stocks and sectors. This approach allows investors to buy into areas where valuations are becoming more attractive due to current events. A crucial part of this strategy is maintaining a long-term time horizon, which Prial described as a rare commodity, urging investors to be patient until stocks return to favor.
A day before that, Jay Woods, Chief Market Strategist at Freedom Capital Markets, also joined CNBC to suggest that stocks are broadening beyond tech and noted that increased participation in the market’s upside is a bullish signal. While technology, specifically software, is identified as the primary laggard, Woods introduced clear lines of demarcation from a technical perspective to categorize other sectors. In analyzing the first three days of the trading year, he highlighted three specific sectors. The energy sector was described as a fake-out. In contrast, the materials sector was identified as a success, having broken out of a year-long base with room for further growth. Additionally, the defense sector is cited as having a major breakout, offering an alternative to picking individual defense stocks.
That being said, we’re here with a list of the 10 cheap S&P 500 stocks to invest in now.
Our Methodology
We used the Yahoo stock screener to compile a list of the S&P 500 stocks that had a forward P/E ratio under 15. We then selected 10 stocks that were the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q3 2025.
Note: All data was sourced on January 12.
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 S&P 500 Stocks to Invest in Now
10. Delta Air Lines Inc. (NYSE:DAL)
Forward P/E Ratio as of January 12: 9.64
Number of Hedge Fund Holders: 70
Delta Air Lines Inc. (NYSE:DAL) is one of the cheap S&P 500 stocks to invest in now. On January 12, Barclays raised the firm’s price target on Delta Air Lines to $85 from $65 while maintaining an Overweight rating on the shares. This decision was made as the firm revised its airline targets and cited positive catalysts for 2026. With demand momentum from late 2025 carrying over and industry growth slowing, airlines are facing favorable year-over-year comparisons.
On January 9, Susquehanna analyst Christopher Stathoulopoulos raised the firm’s price target on Delta Air Lines to $85 from $70 and kept a Positive rating on the shares as part of a Q4 2025 preview. The firm anticipates a favorable fundamental environment for the airline industry heading into 2026 and noted that specific carriers like Delta Air Lines Inc. (NYSE:DAL) are well-positioned to utilize strong brand loyalty and diversified revenue streams.
Furthermore, on December 7, TD Cowen increased its price target for Delta Air Lines to $82, up from the previous $77, while reiterating its Buy rating on the shares. This adjustment comes as part of the firm’s broader Q4 sector preview, which analyzed how the airline industry managed recent operational challenges. The sector handled a recent shutdown better than many anticipated.
Delta Air Lines Inc. (NYSE:DAL) provides scheduled air transportation for passengers and cargo in the US and internationally. The company operates through two segments: Airline and Refinery.
9. Bristol-Myers Squibb Company (NYSE:BMY)
Forward P/E Ratio as of January 12: 9.23
Number of Hedge Fund Holders: 76
Bristol-Myers Squibb Company (NYSE:BMY) is one of the cheap S&P 500 stocks to invest in now. On January 12, Bristol-Myers Squibb announced positive topline results from its Phase 3 SCOUT-HCM clinical trial. This study evaluated Camzyos (mavacamten), which is a cardiac myosin inhibitor/CMI, in adolescent patients aged 12 to under 18 years suffering from symptomatic obstructive hypertrophic cardiomyopathy/oHCM. This rare genetic disease causes heart muscle thickening that obstructs blood flow, leading to significant fatigue and restricted physical activity in young patients.
The SCOUT-HCM trial successfully met its primary endpoint by demonstrating a statistically significant reduction in the Valsalva left ventricular outflow tract/LVOT gradient at Week 28 compared to a placebo. This measurement indicates that the medication effectively reduced the physical obstruction in the heart. Furthermore, the trial reached statistical significance across multiple secondary endpoints. These results suggest that Camzyos could become the first CMI specifically approved for the adolescent population, who currently rely on limited medical management or invasive surgeries.
Camzyos functions as a selective, reversible, allosteric inhibitor of cardiac myosin. It targets the underlying pathophysiology of HCM by inhibiting the formation of excess myosin-actin cross-bridges in the sarcomere, which reduces the heart’s hypercontractility. By easing the dynamic LVOT obstruction and improving cardiac filling pressures, the therapy helps patients become more active in their daily lives. Currently, 4,000+ healthcare providers in the US use this treatment for adults with symptomatic NYHA class II-III oHCM. However, Bristol-Myers Squibb Company’s (NYSE:BMY) Camzyos also carries a Boxed Warning regarding the risk of heart failure.
Bristol-Myers Squibb Company (NYSE:BMY) discovers, develops, licenses, manufactures, markets, distributes, and sells biopharmaceutical products worldwide.
8. The Cigna Group (NYSE:CI)
Forward P/E Ratio as of January 12: 9.16
Number of Hedge Fund Holders: 78
The Cigna Group (NYSE:CI) is one of the cheap S&P 500 stocks to invest in now. On January 6, Bernstein raised the firm’s price target on Cigna to $307 from $294 and kept a Market Perform rating on the shares. This decision was made as Bernstein anticipated a sector-wide turnaround for government Managed Care Organizations starting in 2026, though the firm cautioned that the path to recovery may be bumpy. The firm views current prices as attractive entry points across the board.
A day before this rating, Truist increased its price target for Cigna to $320 from $310, while maintaining a Buy rating on the shares. This sentiment was posted as the firm addressed the ongoing uncertainty surrounding the extension of Enhanced Advance Premium Tax Credits. While a resolution is not widely expected, the firm’s current projections already account for a significant reduction in Marketplace membership across the industry for 2026.
Despite these headwinds, Truist highlighted an opportunity for margin recovery within the Medicare Advantage sector, specifically in both the Individual and Group segments. This optimism is fueled by factors like a favorable MA rate update and the use of conservative utilization assumptions in current pricing models, which follow several years of high medical trends. The firm also noted that companies like The Cigna Group (NYSE:CI) are prioritizing profit margins over aggressive growth.
The Cigna Group (NYSE:CI), together with its subsidiaries, provides insurance and related products and services in the US.
7. Elevance Health Inc. (NYSE:ELV)
Forward P/E Ratio as of January 12: 13.19
Number of Hedge Fund Holders: 82
Elevance Health Inc. (NYSE:ELV) is one of the cheap S&P 500 stocks to invest in now. On January 9, Mizuho analyst Ann Hynes raised the firm’s price target on Elevance Health to $413 from $400 and maintained an Outperform rating on the shares. As part of its Q4 2025 preview, Mizuho broadly revised price targets across the healthcare facilities and managed care sectors. The firm’s latest physician survey revealed a sequential slowdown in healthcare utilization growth. This deceleration suggests that the recent surge in healthcare demand may finally be peaking.
Wells Fargo also raised the firm’s price target on Elevance Health Inc. (NYSE:ELV) to $424 from $403 and maintained an Overweight rating on the shares on January 7. Regarding managed care organizations, the firm expressed the most confidence in Medicare Advantage, while also noting that uncertainty remains high for Medicaid and health insurance exchanges.
The firm anticipates a more difficult environment for hospitals in 2026 as post-COVID tailwinds diminish and legislative risks approach. Meanwhile, the ongoing debate regarding distributors centers on whether performance will be driven by earnings revisions or valuation multiples.
Elevance Health Inc. (NYSE:ELV), together with its subsidiaries, operates as a health benefits company in the US. It has four segments: Health Benefits, CarelonRx, Carelon Services, and Corporate & Other.
6. EQT Corporation (NYSE:EQT)
Forward P/E Ratio as of January 12: 12.11
Number of Hedge Fund Holders: 82
EQT Corporation (NYSE:EQT) is one of the cheap S&P 500 stocks to invest in now. On January 5, Bernstein analyst Bob Brackett raised the firm’s price target on EQT Corporation to $73 from $72, while maintaining an Outperform rating on the shares.
Earlier on December 12, UBS raised its price target on EQT Corporation to $76 from $67 and while maintaining a Buy rating on the shares. The firm noted that after 3 years of limited gains, the energy sector appears positioned for a stronger 2026. This outlook is supported by improving oil and natural gas outlooks, value creation from M&A, cost and capital expenditure efficiencies, emerging oilfield services opportunities, and attractive valuations.
Mizuho also increased its price target for EQT Corporation on the same day to $68 from $60, with an Outperform rating on the shares. This adjustment was part of the firm’s broader 2026 outlook for the E&P sector. The firm acknowledged that current sentiment regarding US oil and gas companies is largely negative due to concerns over oil market oversupply and high levels of natural gas storage. However, the firm noted underappreciated value within the group, particularly in E&P companies, based on long-term fundamentals that are expected to begin materializing in 2026.
EQT Corporation (NYSE:EQT) produces, gathers, and transmits natural gas. The company sells natural gas and natural gas liquids to marketers, utilities, and industrial customers located in the Appalachian Basin.
5. Comcast Corporation (NASDAQ:CMCSA)
Forward P/E Ratio as of January 12: 6.93
Number of Hedge Fund Holders: 84
Comcast Corporation (NASDAQ:CMCSA) is one of the cheap S&P 500 stocks to invest in now. On January 12, Bank of America upgraded Comcast to Buy from Neutral with a price target of $37, which was brought up from $31. This sentiment comes as 2026 is expected to be a landmark year for media as the industry consolidates and pivots toward new digital and live experience strategies.
Additionally, on January 7, Scotiabank lowered its price target for Comcast to $37.50, down from the previous $41.50, while maintaining a Sector Perform rating on the shares. This adjustment came as the firm updated its valuations for telecom services in anticipation of Q4 2025 financial results. Scotiabank noted that the wireless industry experienced heightened promotional intensity during the recent holiday season. Despite increased competition, the firm pointed out that overall industry growth for both revenue and EBITDA remains positive as the sector moves into the new year.
A day before that, Benchmark reduced its price target for Comcast Corporation (NASDAQ:CMCSA) to $44 from $46 to formally account for the completed spinoff of Versant Media Group Inc. (NASDAQ:VSNT). Despite the lower target, the firm maintained a Buy rating on the shares, and also adjusted its revenue and EBITDA estimates downward for 2026 and subsequent years to reflect the separation of the Versant business.
Comcast Corporation (NASDAQ:CMCSA) operates as a media and technology company worldwide. It operates through Residential Connectivity & Platforms, Business Services Connectivity, Media, Studios, and Theme Parks segments.
4. Adobe Inc. (NASDAQ:ADBE)
Forward P/E Ratio as of January 12: 14.18
Number of Hedge Fund Holders: 88
Adobe Inc. (NASDAQ:ADBE) is one of the cheap S&P 500 stocks to invest in now. On January 12, Goldman Sachs assumed coverage of Adobe with a Sell rating and $290 price target. This announcement was made as Goldman Sachs initiated coverage on 12 software names. The firm gave Adobe a Sell rating and warned that high-end user growth is stalling as competition intensifies at the lower end of the market. Adobe’s lack of exposure to this budget-friendly, high-value tier is a primary concern for its 2026 performance.
For the full year 2025, Adobe Inc. (NASDAQ:ADBE) achieved a total annual revenue of $23.77 billion, which was an 11% year-over-year growth. This performance was supported by a non-GAAP EPS of $20.94, which was a 14% increase from the previous year. For Q4 alone, Adobe posted revenue of $6.19 billion, which was a 10% increase year-over-year. The company reported a 3x increase in generative credit consumption quarter-over-quarter, driven by the integration of AI across its suite. New products like Firefly and the Acrobat AI Assistant contributed to a 15% growth in monthly active users.
Partnerships with tech giants such as AWS, Azure, Google, and Microsoft have further expanded Adobe’s AI ecosystem. Specifically, Firefly Foundry and GenStudio are being used by enterprises to create custom, on-brand AI models, significantly increasing content production efficiency and ROI. Adobe also highlighted its pending $1.9 billion acquisition of Semrush, a move intended to consolidate its leadership in brand visibility and Generative Engine Optimization/GEO.
Adobe Inc. (NASDAQ:ADBE) operates as a technology company worldwide. The company has a strategic alliance with HUMAIN for the development of GenAI models and AI-powered applications.
3. Citigroup Inc. (NYSE:C)
Forward P/E Ratio as of January 12: 12.21
Number of Hedge Fund Holders: 107
Citigroup Inc. (NYSE:C) is one of the cheap S&P 500 stocks to invest in now. On January 7, Wolfe Research raised the firm’s price target on Citi to $141 from $121 and maintained an Outperform rating on the shares. As part of the firm’s Top 10 Themes for 2026 report, Barclays highlighted Retail Brokers and Alternative Asset Managers/Alts as the firm’s preferred subsectors. Heading into the new year, the firm maintains a particularly constructive view on these areas, citing their potential to outperform within the broader Banks, Brokers, and Alts landscape.
On the same day, HSBC increased its price target for Citigroup Inc. (NYSE:C) to $87 from $77, while maintaining a Buy rating on the stock. The firm viewed the recent pullback in bank stocks as a selective opportunity for investors to increase their exposure to the sector. HSBC also raised the firm’s adjusted EPS estimates for the 2025–2026 period by ~1% to 7% across its banking coverage.
TD Cowen also raised its price target for Citigroup to $130 from $110, while maintaining a Hold rating on the shares. This adjustment was made as part of a broader Q4 2025 earnings preview for the banking sector. For 2026, the firm highlighted durable tailwinds that are expected to support bank stocks, including a Fed chair who is likely to adopt a more dovish stance.
Citigroup Inc. (NYSE:C) is a diversified financial service holding company that provides various financial products and services to consumers, corporations, governments, and institutions. It operates through five segments: Services, Markets, Banking, US Personal Banking, and Wealth.
2. Bank of America Corporation (NYSE:BAC)
Forward P/E Ratio as of January 12: 12.80
Number of Hedge Fund Holders: 111
Bank of America Corporation (NYSE:BAC) is one of the cheap S&P 500 stocks to invest in now. On January 7, TD Cowen raised the firm’s price target on Bank of America to $66 from $64 with a Buy rating on the shares. In its Q4 2025 earnings preview, TD Cowen adjusted its price targets for the banking group and forecasted solid results characterized by expanding balance sheets and favorable repricing trends. The firm pointed to durable tailwinds for 2026, including the anticipation of a more dovish Fed as the leadership transition approaches, which will act as a catalyst for bank stocks.
HSBC also upgraded Bank of America on the same day from Hold to Buy, while setting a price target of $50. The upgrade followed a recent pullback in the stock, which the firm viewed as a prime opportunity to invest in a market leader featuring a strong outlook for earnings and profitability at an attractive valuation. Furthermore, HSBC noted that BofA is currently trading at a historically wide discount compared to JPMorgan, based on consensus earnings estimates for the next 12 months.
However, Wolfe Research analyst Steven Chubak downgraded Bank of America Corporation (NYSE:BAC) to Peer Perform from Outperform on January 7.
Bank of America Corporation (NYSE:BAC), through its subsidiaries, provides various financial products and services for individual consumers, small and middle-market businesses, institutional investors, large corporations, and governments worldwide.
1. Capital One Financial Corporation (NYSE:COF)
Forward P/E Ratio as of January 12: 11.86
Number of Hedge Fund Holders: 129
Capital One Financial Corporation (NYSE:COF) is one of the cheap S&P 500 stocks to invest in now. On January 12, RBC Capital raised the firm’s price target on Capital One to $275 from $255 with a Sector Perform rating on the shares. The firm’s Q4 2025 outlook for consumer finance suggested that solid fundamentals will persist, supported by a steady and potentially strengthening macro environment. The firm projects a sequential rise in loan volumes, fueled by year-end seasonal activity, alongside improvements in core credit performance as consumers continue to hold up well.
On the same day, JPMorgan analyst Richard Shane also increased the price target for Capital One to $256, up from $237, while maintaining a Neutral rating on the shares. This adjustment was part of the firm’s broader Q4 2025 preview for the consumer finance sector. Shane noted that a proposal from President Trump to cap credit card interest rates at 10% for one year has introduced significant near-term volatility to the industry. JPMorgan warns that such a rate reduction would fundamentally reshape the credit card market by severely cutting issuer profitability and limiting consumer access to credit.
However, the firm categorized this proposal as a high-severity, low-probability risk that would likely face major legal hurdles if pursued. Despite the increased price target, Shane suggested that a defensive investment strategy remains appropriate for the consumer finance group given these uncertainties.
Capital One Financial Corporation (NYSE:COF) operates as the financial services holding company for Capital One, National Association, which provides various financial products and services in the US, Canada, and the UK.
While we acknowledge the potential of COF 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 COF and that has 100x upside potential, check out our report about this cheapest AI stock.
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