We’re only one month into 2026, and the progress of global economies has been anything but normal. While geopolitical tensions steal the limelight, countries haven’t been shy of using their trade domination as leverage. When Donald Trump threatened to acquire Greenland, Europe threatened to pivot toward China and India for trade. When Canada announced plans to do something similar, the US threatened to impose a 100% tariff.
These developments have kept the broader market in check so far. The next FOMC meeting, scheduled for January 28, is also keeping everyone on their toes. Uncertain environments like the one we’re currently going through tend to keep stock valuations suppressed. However, as soon as these go away, the same stocks revert to better valuations. Something similar could happen this week, either through a rate cut or clarity on US-Iran relations.
Liz Thomas, head of investment strategy at SoFi, spoke to Marketwatch on January 25 and pointed out that even without a rate cut, cheaper stocks could give impressive returns:
“I don’t think the market needs a cut, and frankly, I think the market can be just fine without a cut for the early part of this year… So I think investors are optimistic the broadening out in this market [will] continue, and for other sectors to pull some weight as far as returns go.”
We therefore decided to look at stocks trading at a cheap forward earnings multiple and with significant upside potential for investors this year.
Stocks
Our Methodology
To come up with our list of 10 cheap stocks with huge upside potential, we looked at stocks with a market cap of at least $2 billion that were trading below a forward PE of 15x. We then looked at their potential upside according to Wall Street analysts, shortlisted stocks with at least 35%-40% upside, and ranked them in ascending order of their upside potential, as of January 23. We have also included the number of hedge funds that hold the stock as of Q3 2025.
Why do we care about what hedge funds do? 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. Vista Energy, S.A.B. de C.V. (NYSE:VIST)
Potential Upside: 39.89%
Forward P/E: 9.56
Number of Hedge Fund Holders: 21
Tasso Vasconcellos, an analyst at UBS, upgraded the stock from a Hold rating to a Buy on January 11. He also raised the firm’s price target for the shares from $50 to $65. His revised price target offers an additional 22.8% upside from current levels. 12 other analysts cover the stock on Wall Street, and they are even more bullish, with a median price target of 39.89%.
The upgrade is driven by UBS’s view that the company is positioned for strong production growth over the next several years. The firm also believes that the stock is trading at a valuation that is discounted relative to the company’s long-term prospects. In a research note to investors, the analyst highlighted Vista Energy’s solid execution track record, noting the company’s proven ability to deliver on its plans and successfully navigate prior challenges related to equipment availability and outflow capacity constraints. Based on these factors, the firm believes the current share price levels offer an attractive entry point for investors.
The company announced that it will release its full-year 2025 and fourth-quarter 2025 financial results on February 25, 2026, after market close.
Vista Energy, S.A.B. de C.V. (NYSE:VIST) is engaged in the exploration and production of oil and gas in Latin America. Its principal assets are located in the Vaca Muerta play of the Neuquina basin, Argentina. The company owns oil-producing assets in Mexico and Argentina. It was founded in 2017 and is based in Mexico City, Mexico.
9. SM Energy Company (NYSE:SM)
Potential Upside: 55.25%
Forward P/E: 8.31
Number of Hedge Fund Holders: 44
Tim Rezvan of KeyBanc reaffirmed his Buy rating on SM Energy Company (NYSE:SM) stock, along with the price target of $28, on January 17. Earlier in the same week, on January 13, RBC Capital analyst Scott Hanold lowered his price target on the stock from $35 to $29. However, the analyst kept his Hold rating on the shares. The analyst explained in a research note that the firm updated its estimates after completing its final fourth-quarter commodity mark-to-market analysis.
Additionally, analyst Scott Hanold noted that the price target revision also reflects RBC’s updated commodity price outlook, which now assumes lower oil prices. This outlook led to a lower price target. Interestingly, the geopolitical tensions in the Middle East are keeping oil prices elevated.
Mizuho Securities also presented a similar stance on the company on January 9. William Janela of Mizuho Securities maintained a Buy rating while cutting the firm’s price target for the stock from $38 to $34. His revised price target implies an impressive 82% upside from the current levels. The update comes ahead of the company’s fourth-quarter earnings report. According to the analyst, the price target adjustment reflects a modestly slower activity pace compared with the firm’s previous model assumptions, which led to the revision in its outlook.
SM Energy Company (NYSE:SM) operates as an independent energy company. The company is involved in the exploration, production, acquisition, and development of gas, oil, and natural gas liquids in Texas. It was founded in 1908 and is based in Denver, Colorado.
