On January 8, Greg Branch, Founder and Managing Partner at Branch Global Capital Advisors, appeared on CNBC to suggest ignoring headline noise and focusing on long-term tailwinds. Branch advised clients to distinguish between episodic, short-term market movements and the long-term factors and tailwinds that will influence the economy and corporate outcomes. Regarding the broader market outlook, Branch characterized 2026 as a potentially strong year for investors. He argued that even if the Fed does not continue its rate-cutting activity throughout the year, the actions already taken will provide a lasting impact. He projected double-digit earnings growth and healthy GDP growth. Branch asserted that as long as there are no unforeseen political shocks, the market is well-positioned for success.
Branch further discussed the ongoing rotation into cyclical and high-beta names, which was a successful trend in the previous year. While he acknowledged that high-growth areas like AI and data centers still show strength, he believes that more cyclical names will see an acceleration in earnings growth and receive increased investor exposure. He identified two primary vectors for selection: relative supply-demand tightness and operating leverage. He looks for companies that will experience an exponential tailwind in earnings growth during a cyclical recovery. Branch specifically highlighted financials as being at the tip of the spear for performance gains in this environment. He also pointed to minerals and mining as a key area of interest and noted that these sectors benefit from the cyclical recovery and also from significant supply-demand tightness in rare earths and other minerals.
Earlier on December 26, Michael Farr, Farr Miller & Washington, joined ‘Closing Bell Overtime’ on CNBC to suggest that the long-term market path continues to be up. Explaining why he believes a market pullback is imminent and drawing on his long-term experience, Farr noted that pullbacks just happen and pointed out that the market has seen three consecutive years of gains. He particularly identifies February as a month for a case of the nerves and explained that once the January headlines from earnings season fade, colder days often lead to increased selling. Despite this prediction, Farr clarifies that a pullback would not signal the end of the current upward trend, as he believes the economy remains growing. He even suggests that the Fed may be easing a little more than they should, which keeps the long-term path of least resistance moving upward.
That being said, we’re here with a list of the 10 cheap stocks to buy for the next 3 years.
Our Methodology
We used the Yahoo stock screener and SeekingAlpha to compile a list of stocks with a forward P/E ratio under 15 and a 3-5-year expected average EPS growth rate of at least 30%, respectively. 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 9.
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 Stocks to Buy For the Next 3 Years
10. Coty Inc. (NYSE:COTY)
Forward P/E Ratio as of January 9: 7.25
EPS Forward Long Term Growth (3-5 Year CAGR): 34.18%
Number of Hedge Fund Holders: 30
Coty Inc. (NYSE:COTY) is one of the cheap stocks to buy for the next 3 years. On December 23, Grupo Santander downgraded Coty to Neutral from Outperform with a $3.50 price target. This sentiment was announced as the firm suggested that the company’s transition phase may be extended following the change in leadership.
A day before that, Evercore ISI downgraded Coty to In Line from Outperform with a $7 price target. The shift in rating is largely due to the departure of CEO Sue Nabi, who had been a cornerstone of the firm’s investment thesis. While the firm acknowledged that Coty shares appear fundamentally undervalued at current levels, it noted a lack of visibility regarding the timing and specific catalysts needed to unlock that value. Consequently, Evercore ISI viewed a near-term stock outperformance as unlikely.
On December 19, Bank of America lowered its price target for Coty Inc. (NYSE:COTY) to $3 from $3.50, while maintaining an Underperform rating. In a broad 2026 outlook for the consumer staples sector, the firm noted that consumption growth remains the primary unresolved concern for investors.
Coty Inc. (NYSE:COTY), together with its subsidiaries, manufactures, markets, distributes, and sells branded beauty products worldwide. It operates through two segments: the Prestige and Consumer Beauty.
9. Fox Factory Holding Corp. (NASDAQ:FOXF)
Forward P/E Ratio as of January 9: 13.19
EPS Forward Long Term Growth (3-5 Year CAGR): 34.93%
Number of Hedge Fund Holders: 30
Fox Factory Holding Corp. (NASDAQ:FOXF) is one of the cheap stocks to buy for the next 3 years. On January 6, Roth Capital lowered the firm’s price target on Fox Factory to $19 from $21 with a Neutral rating on the shares. This sentiment was posted as the company faced declines in its Bike and Marucci segments and is pivoting toward cost alignment, debt reduction, and aggressive free cash flow generation to stabilize its financial outlook
In Q3 2025, Fox Factory Holding Corp. (NASDAQ:FOXF) highlighted a 5% year-over-year increase in net sales, which reached $376.4 million. However, the company saw a net loss of $0.6 million for the quarter, which was a significant shift from the $4.8 million net income reported in the same period the previous year. Adjusted net income also saw a decline, dropping to $9.9 million from $14.8 million.
The company’s performance was supported by resilience in its Powered Vehicles Group and aftermarket accessories, alongside successful footprint consolidation aimed at long-term margin expansion. Fox Factory is also on track to meet its $25 million cost reduction target for the fiscal year. However, these gains were offset by underperformance in the Specialty Sports Group, specifically the Marucci brand, which suffered due to a softening consumer environment.
Fox Factory Holding Corp. (NASDAQ:FOXF) designs, engineers, manufactures, and markets performance-defining products and systems worldwide.
