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.
8. Smurfit Westrock (NYSE:SW)
Forward P/E Ratio as of January 9: 14.47
EPS Forward Long Term Growth (3-5 Year CAGR): 33.52%
Number of Hedge Fund Holders: 34
Smurfit Westrock (NYSE:SW) is one of the cheap stocks to buy for the next 3 years. On January 8, Morgan Stanley raised the firm’s price target on Smurfit Westrock to 4,000 GBp from 3,900 GBp, while maintaining an Overweight rating on the shares.
However, on January 6, Truist maintained a Buy rating on Smurfit Westrock while reducing the price target to $49 from $50. The firm anticipated that limited promotions would lead to modestly challenged packaging volumes in early 2026, though some consumer packaged goods companies are successfully increasing volumes while maintaining price gains. Additionally, the firm expected continued growth for beverage cans in North America and Europe.
On the same day, Citi also lowered the firm’s price target on Smurfit Westrock (NYSE:SW) to $48 from $49, while keeping a Buy rating on the shares. The firm updated its estimates in the packing group as part of its 2026 outlook. The volume setup for the group remains challenging in 2026.
Smurfit Westrock (NYSE:SW), together with its subsidiaries, manufactures, distributes, and sells containerboard, corrugated containers, and other paper-based packaging products.
7. Constellium (NYSE:CSTM)
Forward P/E Ratio as of January 9: 8.16
EPS Forward Long Term Growth (3-5 Year CAGR): 69.67%
Number of Hedge Fund Holders: 36
Constellium (NYSE:CSTM) is one of the cheap stocks to buy for the next 3 years. On January 8, Deutsche Bank raised the firm’s price target on Constellium to $25 from $22, while keeping a Hold rating on the shares.
Earlier in its Q3 2025 earnings report, Constellium’s CEO Jean-Marc Germain noted that while scrap spreads had been a headwind year-to-date, they were beginning to widen. This shift could impact financial performance by $15 million to $20 million per quarter. Although the full benefit was not captured in Q3 due to staggered purchasing agreements, the company expects these widening spreads to provide a tailwind in Q4 and throughout 2026.
Constellium (NYSE:CSTM) headlined the quarter with a 20% year-over-year revenue surge to $2.2 billion. Net income saw a jump to $88 million, up from $8 million in the same period last year. Total shipments grew by 6% to 373,000 metric tons, driven by operational improvements at the Muscle Shoals facility and healthy packaging demand.
Constellium (NYSE:CSTM), together with its subsidiaries, designs, manufactures, and sells rolled and extruded aluminum products for the aerospace, packaging, automotive, commercial transportation, general industrial, and defense end-markets.
6. UWM Holdings Corporation (NYSE:UWMC)
Forward P/E Ratio as of January 9: 11.95
EPS Forward Long Term Growth (3-5 Year CAGR): 61.21%
Number of Hedge Fund Holders: 45
UWM Holdings Corporation (NYSE:UWMC) is one of the cheap stocks to buy for the next 3 years. On January 6, Goldman Sachs lowered the firm’s price target on UWM Holdings to $5 from $6 and kept a Neutral rating on the shares. The firm noted that while regional banks trailed the market by 200 to 300 basis points in 2025 due to macro and credit concerns, a 13% year-end rally provided late momentum. For 2026, Goldman Sachs anticipated a multi-year fundamental recovery driven by steady loan growth, NII momentum, and positive operating leverage, though credit risk remains the primary uncertainty.
In other news, on December 17, UWM Holdings Corporation (NYSE:UWMC) announced a definitive merger agreement to acquire Two Harbors Investment Corp. (NYSE:TWO). The all-stock transaction is valued at ~$1.3 billion in equity. This move aims to nearly double UWM Holdings’ mortgage servicing rights portfolio by adding Two Harbors’ $176 billion in unpaid principal balance, resulting in a combined servicing book of roughly $400 billion. This scale would rank the merged entity as the 8th largest mortgage servicer in the US.
The acquisition is expected to generate ~$150 million in annual cost and revenue synergies. Beyond financial gains, the deal serves a dual purpose for UWM Holdings: it accelerates the company’s initiative to bring servicing in-house and significantly increases its public float. The transaction is projected to raise UWM Holdings’ public float by 93%, reaching ~513 million shares (valued at $2.6 billion as of mid-December 2025).
UWM Holdings Corporation (NYSE:UWMC) originates, sells, and services residential mortgage lending in the US.
5. HF Sinclair Corporation (NYSE:DINO)
Forward P/E Ratio as of January 9: 9.62
EPS Forward Long Term Growth (3-5 Year CAGR): 55.00%
Number of Hedge Fund Holders: 53
HF Sinclair Corporation (NYSE:DINO) is one of the cheap stocks to buy for the next 3 years. On January 8, Piper Sandler upgraded HF Sinclair to Overweight from Neutral with a price target of $68, which was brought up from $64. Amid a favorable refining environment, Piper Sandler identified HF Sinclair as the top pick among small-to-mid-cap refiners and noted that the company increasingly resembles a mini-large cap stock. The firm highlights HF Sinclair’s significant West Coast exposure as a key advantage, expecting a tighter regional market to boost margins and capture rates.
Earlier, on December 12, Mizuho also increased the price target for HF Sinclair Corporation (NYSE:DINO) to $63 from $62, while maintaining an Outperform rating on the shares. This adjustment was made as part of the firm’s broader 2026 outlook for the exploration and production/E&P sector. Despite current negative sentiment driven by high natural gas storage and an oversupplied oil market, Mizuho argued that US oil and gas companies hold underappreciated value that could begin to be realized throughout 2026.
In its strategic recommendations, Mizuho suggested that investors reallocate risk toward oil-focused E&Ps while remaining selective with natural gas stocks. Notably, the firm adopted a more neutral stance on the refining sector, even as it remains bullish on HF Sinclair’s specific prospects.
HF Sinclair Corporation (NYSE:DINO) operates as an independent energy company in the US. It operates through five segments: Refining, Renewables, Marketing, Lubricants and Specialties, and Midstream.
4. Ally Financial Inc. (NYSE:ALLY)
Forward P/E Ratio as of January 9: 8.20
EPS Forward Long Term Growth (3-5 Year CAGR): 38.44%
Number of Hedge Fund Holders: 58
Ally Financial Inc. (NYSE:ALLY) is one of the cheap stocks to buy for the next 3 years. On January 9, Bank of America raised the firm’s price target on Ally Financial to $51 from $42 and maintained a Buy rating on the shares. Although the firm acknowledged skepticism regarding the stock’s 14% premium over its pre-pandemic range, it remained bullish due to sustained price momentum. BofA pointed out that the stock’s outperformance against consumer finance peers since mid-November was largely driven by a $2 billion buyback authorization.
TD Cowen also raised the firm’s price target on Ally Financial, a day before the BofA rating, to $55 from $50 with a Buy rating. This adjustment reflects an updated outlook for the specialty finance sector, which is increasingly influenced by shifting macroeconomic factors and secular growth trends. The firm’s analysis highlights several key areas of the credit market expected to drive performance through 2026. These include consistent expansion in auto lending and credit cards, as well as the rising prominence of non-prime lending, student loans, and buy-now-pay-later services.
On the same day, UBS initiated coverage of Ally Financial Inc. (NYSE:ALLY) with a Buy rating and a $56 price target and suggested that the market is currently undervaluing the company’s trajectory for improving returns. UBS projected that Ally Financial’s ROTCE will trend toward 14% by 2027, with additional growth expected in subsequent years. This optimistic outlook is fueled by a combination of expanding net interest margins, steady improvements in credit losses, and the resumption of share repurchases.
Ally Financial Inc. (NYSE:ALLY) is a digital financial services company that provides various digital financial products and services in the US, Canada, and Bermuda.
3. First Solar Inc. (NASDAQ:FSLR)
Forward P/E Ratio as of January 9: 10.80
EPS Forward Long Term Growth (3-5 Year CAGR): 32.32%
Number of Hedge Fund Holders: 67
First Solar Inc. (NASDAQ:FSLR) is one of the cheap stocks to buy for the next 3 years. On January 9, Bank of America raised the firm’s price target on First Solar to $291 from $255 and kept a Buy rating on the shares. Looking toward 2026, BofA described the upcoming period as a stock-picker’s cycle rather than a solar-beta cycle. This suggests that broad sector trends will no longer lift all boats; instead, success will depend on individual company performance.
A day before that, Guggenheim raised the firm’s price target on First Solar Inc. (NASDAQ:FSLR) to $312 from $289, while keeping a Buy rating on the shares. This sentiment was posted as the firm noted that the potential for significantly disruptive policy and trade developments should not be discounted, particularly regarding the possible implementation of Section 232 tariffs.
Additionally, on January 7, Jefferies downgraded First Solar from Buy to Hold while lowering its price target to $260 from $269. The firm expressed caution regarding the company’s 2026 outlook and cited limited booking visibility and emerging strategic questions. The firm noted that the anticipated Section 232 tariff tailwinds may underwhelm investor expectations due to potential carve-outs for Germany that could dilute pricing benefits, combined with developers moving ahead of duties.
First Solar Inc. (NASDAQ:FSLR) is a solar technology company that provides photovoltaic/PV solar energy solutions in the US, France, India, Chile, and internationally.
2. Bristol-Myers Squibb Company (NYSE:BMY)
Forward P/E Ratio as of January 9: 9.24
EPS Forward Long Term Growth (3-5 Year CAGR): 86.31%
Number of Hedge Fund Holders: 76
Bristol-Myers Squibb Company (NYSE:BMY) is one of the cheap stocks to buy for the next 3 years. On January 9, Scotiabank analyst Louise Chen raised the firm’s price target on Bristol-Myers to $60 from $53, while maintaining a Sector Perform rating on the shares. With the stock trading at an inexpensive valuation and several key milestones on the horizon, the firm views the upcoming catalyst-rich year as a strong buying opportunity.
In other news, on December 11, the FDA granted Priority Review to Bristol-Myers Squibb Company’s (NYSE:BMY) supplemental application for Opdivo (nivolumab) combined with AVD chemotherapy. The potential new frontline treatment is for adult and pediatric patients (12+) with Stage III or IV classical Hodgkin Lymphoma. The target action date/PDUFA is set for April 8, 2026.
The application is supported by the Phase 3 SWOG S1826 study, which showed that the Opdivo-AVD regimen significantly improved progression-free survival/PFS compared to the current standard. At a 2.1-year median follow-up, the PFS rate for the Opdivo arm was 92% versus 83% for the control group, with an even more pronounced benefit observed in patients over age 60.
Bristol-Myers Squibb Company (NYSE:BMY) discovers, develops, licenses, manufactures, markets, distributes, and sells biopharmaceutical products worldwide.
1. Micron Technology Inc. (NASDAQ:MU)
Forward P/E Ratio as of January 9: 10.27
EPS Forward Long Term Growth (3-5 Year CAGR): 47.78%
Number of Hedge Fund Holders: 105
Micron Technology Inc. (NASDAQ:MU) is one of the cheap stocks to buy for the next 3 years. On January 9, Mizuho analyst Vijay Rakesh raised the firm’s price target on Micron to $390 from $290 with an Outperform rating on the shares. In its 2026 semiconductor outlook, Mizuho broadly revised price targets across the sector, forecasting continued but more moderate growth than in 2025. The firm prioritized AI accelerators, wafer fab equipment/WFE, optical components, and memory. Conversely, Mizuho remained cautious on the automotive, analog, and consumer hardware (handsets/PCs) markets.
In other news, on January 6, Micron Technology Inc. (NASDAQ:MU) announced the launch of the Micron 3610 NVMe SSD, which marked the industry’s first PCIe Gen5 G9 QLC SSD designed for client computing. Built on Micron’s advanced G9 NAND technology, this drive is engineered to bring premium performance and high capacity to mainstream PCs, ultra-thin laptops, and AI-ready devices. It is currently sampling with select OEM partners and will be available in capacities ranging from 1TB to 4TB.
Micron has integrated data center-grade security features into this client-level drive. This includes Data Object Exchange and Device Identifier Composition Engine to enhance user data protection. Positioned between Micron’s premium Gen5 4600 series and its value Gen4 offerings, the 3610 SSD is designed to democratize high-end Gen5 performance while maximizing battery life for the next generation of hybrid work and gaming laptops.
Micron Technology Inc. (NASDAQ:MU) designs, develops, manufactures, and sells memory and storage products in the US, Taiwan, Singapore, Japan, Malaysia, China, India, and internationally.
While we acknowledge the potential of MU 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 MU and that has 100x upside potential, check out our report about this cheapest AI stock.
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