In this article, we will be taking a look at the 10 Cheap Stocks With Strong Buy Ratings on Wall Street.
Cheap and undervalued stocks in the U.S. remain one of the most compelling opportunities heading into 2026, as small caps and select low‑multiple names trade at notable discounts despite a strong overall market. As of December 19, 2025, the S&P 500 is up approximately 16.20% year-to-date, trading in the high 6,700s to low 6,800s. This reflects a robust large-cap rally and elevated multiples at the top of the market, while smaller stocks continue to lag in relative valuation terms.
Research from December 2025 indicates that U.S. small‑cap stocks are the most undervalued major segment, trading around a 15% discount to Morningstar’s aggregate fair value. By contrast, large-cap stocks are much closer to fair value. On a forward price‑to‑earnings basis, small caps trade near 14x earnings versus roughly 20x for large caps, implying a 30% discount, the widest spread since the dot‑com era. Even within the S&P 500, screens from November 2025 highlight subsets of “cheap growth” names with below-market multiples but double-digit EPS CAGRs through 2027, demonstrating that mispriced growth exists across the market.
Looking ahead to 2026, market commentary from December 2025 highlights valuation extremes in mega-cap stocks, particularly in tech and growth segments, while smaller, cheaper cyclical stocks appear more attractively valued. Analysts and asset managers expect that, as investors anticipate Fed easing, moderating inflation, and broader earnings growth across sectors, market leadership may rotate toward these undervalued segments. Consensus forecasts point to positive but more modest index-level returns, with potential excess performance coming from strategic tilts toward value, quality, and small-cap stocks rather than broad S&P 500 exposure.
With that being said, let’s take a look at the cheap stocks to buy.
Our Methodology
For our methodology, we selected cheap stocks meeting the following criteria: a price-to-earnings (P/E) ratio below 15, a consensus Buy rating, and coverage by at least 10 analysts. From this pool, we identified the top 10 stocks and ranked them in descending order based on their P/E ratios.
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).
Here is our list of the 10 Cheap Stocks With Strong Buy Ratings on Wall Street.
10. First Horizon Corporation (NYSE:FHN)
PE Ratio: 14.83
First Horizon Corporation (NYSE:FHN) is one of the cheap stocks to buy.
TheFly reported on December 18 that Truist Securities analyst John McDonald maintained a Hold rating on FHN and raised the price target to $26 from $24, reflecting improved fundamentals and management commentary while retaining a cautious stance. The updated target continues to factor in favorable capital return initiatives and better visibility on net interest income and fee income growth.
Other recent analyst actions reinforce a mixed but constructive backdrop. On December 17, 2025, Keefe, Bruyette & Woods (KBW) maintained a Market Perform rating and lifted its price target to $24 from $23, reflecting steady execution. On December 16, 2025, J.P. Morgan reiterated a Neutral/Hold rating while raising its target to $27 from $23, highlighting resilience in earnings power. Additionally, Deutsche Bank initiated coverage with a Buy rating and a $28 price target, noting First Horizon’s attractive valuation and execution.
Operationally, First Horizon Corporation (NYSE:FHN)’s stock reached a one‑year high in mid‑December 2025 following analyst target increases and positive reception to capital return strategies, including the board’s authorization of a $1.2 billion stock repurchase program, equivalent to up to ~11.3% of outstanding shares, signaling confidence in the balance sheet and valuation. The bank also declared a $0.15 quarterly dividend, payable in early January 2026, supporting an attractive yield for income‑oriented investors.
First Horizon Corporation (NYSE: FHN) is a U.S. regional bank holding company based in Memphis, Tennessee, founded in 1864. Through First Horizon Bank, it provides commercial, consumer, and specialty banking, wealth management, and financial services across 12 Southern states, serving both individual and institutional clients.
9. Lear Corporation (NYSE:LEA)
PE Ratio: 14.38
Lear Corporation (NYSE:LEA) is among the cheap stocks to buy.
TheFly reported on December 15 that Citigroup maintained its Buy rating on LEA and raised the price target to $146 from $136, reflecting confidence in the company’s long‑term prospects amid a challenging auto supply cycle. Citigroup’s bullish stance is among the highest Wall Street targets for LEA, even as the broader consensus remains tempered.
Lear Corporation (NYSE:LEA) reported third‑quarter 2025 results with adjusted EPS of $2.79 on $5.7 billion in revenue, modestly above some expectations, while generating $444 million in operating cash flow and $307 million in free cash flow. The business also repurchased about $100 million of shares during the quarter under its ongoing repurchase program. LEA’s total liquidity stood near $3.0 billion at quarter’s end, supporting capital returns and operational flexibility.
Separately, Morgan Stanley downgraded LEA from Overweight to Equal‑Weight with a $112 target on December 8, reflecting caution around auto production cyclicality and demand variability.
Lear Corporation (NYSE:LEA) is a leading global automotive technology company that designs, engineers, manufactures, and supplies advanced seating and electrical systems to original equipment manufacturers (OEMs) worldwide.
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