In this article, we will take a look at the 10 Most Profitable Undervalued Stocks to Buy
Profitability has moved back into focus amid an environment where interest rates remain well above the levels seen for much of the past decade. With financing costs still elevated, markets have become more selective, placing greater emphasis on earnings quality and the ability of companies to generate returns from the capital they deploy.
This has been underscored by J.P. Morgan Asset Management; in their market insight entitled “Investors seeking resilience should consider a quality bias”, the firm has highlighted the importance of focusing on “companies that can translate investments into healthy profits, as reflected by metrics such as higher levels of return on equity (ROE).” In periods of tighter financial conditions, the firm has noted that profitability and a strong balance sheet tend to play a larger role in separating higher quality names.
J.P. Morgan Asset Management pointed to historical examples where periods of quality-stock underperformance can be followed by sharp reversals. The firm cited 2003 to 2008 as an example where higher-quality companies lagged broader developed markets for four consecutive years from 2003 to 2006, but as the cycle matured, “higher-quality fundamentals returned to the fore, with quality stocks outperforming by 7 percentage points in both 2007 and 2008.”
In view of this, we’ll look at highly profitable companies that remain undervalued.
Photo by Scott Graham on Unsplash
Our Methodology:
To arrive at the list of 10 Most Profitable Undervalued Stocks to Buy, we used the Finviz stock screener to compile a list of US Stocks with a market capitalization of at least $2 billion, a return on equity (ROE) of at least 15%, and trading at a forward price-to-earnings (PE) ratio below 15x. We then ranked the names based on the number of hedge funds holding the stock, using Insider Monkey’s hedge fund database.
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. American Financial Group, Inc. (NYSE:AFG)
Number of Hedge Fund Holders: 26
Forward PE: 10.66x
ROE: 16.91%
On February 4, 2026, American Financial Group, Inc. (NYSE:AFG) reported fourth-quarter revenue of $2.06 billion, comfortably ahead of the $1.83 billion consensus estimate. The quarter was also notable for underwriting performance, as underwriting profit rose 41% year over year and reached a new quarterly record.
Analyst sentiment turned more constructive earlier in the year. On January 15, 2026, Wells Fargo analyst Hristian Getsov initiated coverage of American Financial Group, Inc. (NYSE:AFG) with an Overweight rating and a $165 price target. The firm expects improved growth in 2026, in part due to favorable year-over-year comparisons. Wells Fargo also highlighted AFG’s relatively low exposure to property insurance, which it believes should help support margin stability in the coming year. The firm pointed to the company’s “superior” return on equity profile as a key differentiator within the insurance space.
American Financial Group, Inc. (NYSE:AFG) is an insurance holding company focused on specialty property and casualty insurance in the United States. Its operations span specialty transportation, marine, agricultural, and commercial property coverage, alongside excess and surplus lines, executive and professional liability, workers’ compensation, and specialty financial insurance products.
9. Globe Life Inc. (NYSE:GL)
Number of Hedge Fund Holders: 42
Forward PE: 8.93x
ROE: 22.28%
On February 6, 2026, JPMorgan analyst Jimmy Bhullar raised his price target on Globe Life Inc. (NYSE:GL) to $181 from $180 and reiterated an Overweight rating. The modest adjustment followed the company’s latest earnings update and the company’s fiscal 2026 earnings outlook.
A day earlier, on February 5, 2026, Globe Life Inc. (NYSE:GL) reported fourth-quarter revenue of $1.52 billion, slightly below the consensus estimate of $1.53 billion. While the top line came in slightly lower than consensus expectations, investor focus centered more on the company’s forward outlook. For fiscal year 2026, Globe Life Inc. (NYSE:GL) reportedly sees earnings of $14.95 to $15.65 per share, compared with a consensus estimate of $15.03. The range suggests management sees room for continued earnings growth.
Globe Life Inc. (NYSE:GL) provides life and supplemental health insurance products primarily to lower-middle- and middle-income households in the United States. Through its subsidiaries, the company operates across Life Insurance, Supplemental Health Insurance, and Investments, offering a mix of whole and term life policies alongside Medicare supplement and limited-benefit health products such as accident, cancer, and critical illness coverage.
8. Ball Corporation (NYSE:BALL)
Number of Hedge Fund Holders: 43
Forward PE: 14.64
ROE: 16.17%
On February 5, 2026, Citi analyst Anthony Pettinari raised his price target on Ball Corporation to $74 from $67 and reiterated a Buy rating, citing strong fourth-quarter results and what the firm described as a compelling outlook for 2026 and 2027.
A day earlier, on February 4, 2026, a wave of analysts updated their views after Ball’s earnings release. Truist raised its price target to $75 from $69 and kept a Buy rating, noting that the stock’s roughly 9% post-earnings move reflected growing investor confidence in execution and the company’s more focused approach to profitable growth under new CEO Ron Lewis. RBC Capital also lifted its target to $74 from $67 and reiterated an Outperform rating, highlighting a fourth-quarter earnings beat driven by robust volumes and continued strong execution.
BofA raised its price target to $71 from $63 and kept a Buy rating, while modestly increasing its FY2026 and FY2027 EPS forecasts following the quarter. UBS lifted its target to $66 from $58 and maintained a Neutral rating after updating its model post-earnings. Morgan Stanley raised its price target to $66 from $63 and kept an Equal Weight rating, citing improving clarity on operating leverage into 2027, though near-term earnings revisions may be limited.
On February 3, 2026, Ball reported fourth-quarter revenue of $3.35 billion, ahead of the $3.11 billion consensus estimate. CEO Ron Lewis said the company delivered robust volume growth in the quarter and returned approximately $1.54 billion to shareholders through share repurchases and dividends.
Ball Corporation (NYSE:BALL) supplies aluminum packaging products for the beverage, personal care, and household products industries in the United States, Brazil, and internationally. The company manufactures and sells aluminum beverage containers to fillers of carbonated soft drinks, beer, energy drinks, and other beverages.
7. The Hartford Insurance Group, Inc. (NYSE:HIG)
Number of Hedge Fund Holders: 49
Forward PE: 9.89x
ROE: 21.66%
On February 5, 2026, Keefe Bruyette raised its price target on The Hartford Insurance Group, Inc. (NYSE:HIG) to $163 from $160 and maintained an Outperform rating. The firm pointed to sustained premium growth, stable core underwriting margins, and ongoing share repurchases as factors it expects to support the stock over the next 12 months.
Views from other firms were more measured but moved in the same direction following the earnings release. After updating models to reflect fourth-quarter results, Citi and Morgan Stanley both raised their price targets on February 4 and February 3, 2026, respectively, while maintaining Neutral and Equal Weight ratings. The firms cited improved visibility around capital returns and net interest income, partially offset by slightly lower combined ratio expectations for 2026 and 2027.
On January 30, 2026, the company reported fourth-quarter revenue of $7.3 billion, up from $6.87 billion a year earlier. CEO Christopher Swift said the company generated core earnings of $3.8 billion for the year, translating to a 19.4% core ROE, driven by strong performance in Business Insurance, improved profitability in Personal Insurance, and solid margins in Employee Benefits.
The Hartford Insurance Group, Inc. (NYSE:HIG) provides insurance and financial services to individual and business customers across the United States, the United Kingdom, and other international markets, with operations spanning commercial lines, personal lines, and group benefits.
6. Ameriprise Financial, Inc. (NYSE:AMP)
Number of Hedge Fund Holders: 52
Forward PE: 11.67x
ROE: 60.51%
On February 2, 2026, RBC Capital analyst Kenneth Lee raised his price target on Ameriprise Financial, Inc. (NYSE:AMP) to $605 from $580 and reiterated an Outperform rating following the company’s fourth-quarter earnings report. RBC highlighted stronger-than-expected wrap flows in the Advice and Wealth Management segment, noting that organic growth from existing advisors was the primary driver, with some seasonal lift also contributing.
Other firms adjusted their views after digesting the same results. Bank of America and Piper Sandler both updated their outlooks in late January and early February. On February 1, 2026, Bank of America raised its price target to $660 from $642 and kept a Buy rating after updating its model post-earnings. Earlier, on January 30, 2026, Piper Sandler upgraded Ameriprise to Neutral from Underperform and lifted its price target to $530 from $434, saying several headwinds that had pressured the stock since late 2024 appear to be easing. Piper pointed to wealth management margin stability and strong client flows in the quarter, adding that concerns around a more competitive advisor recruiting environment were largely alleviated by the results.
Ameriprise reported fourth-quarter revenue of $4.96 billion on January 29, 2026, exceeding the $4.74 billion consensus estimate. CEO Jim Cracchiolo said the quarter was driven by robust client activity and strong inflows, resulting in record revenue and earnings for both the quarter and the full year. He also noted that the company’s return on equity remained among the strongest in the industry and that Ameriprise returned more than 100% of adjusted operating earnings to shareholders during the quarter.
Ameriprise Financial, Inc. (NYSE:AMP), together with its subsidiaries, operates as a diversified financial services company in the United States and internationally. The company offers financial planning and advice services to individual and institutional clients.
5. Verizon Communications Inc. (NYSE:VZ)
Number of Hedge Fund Holders: 60
Forward PE: 9.03x
ROE: 16.86%
On February 3, 2026, RBC Capital raised its price target on Verizon Communications Inc. (NYSE:VZ) to $48 from $44 while maintaining a Sector Perform rating. The move followed Verizon’s fourth-quarter earnings beat. RBC pointed to the company’s turnaround plan, which centers on operating and capital expenditure reductions aimed at improving free cash flow. The firm also highlighted Verizon’s focus on growing its postpaid subscriber base and its commitment to return $25 billion to shareholders through share repurchases.
On the same day, JPMorgan and Citi also raised their price targets on Verizon Communications Inc. while reiterating Buy/Overweight ratings. JPMorgan lifted its target to $49 from $47, citing stronger-than-expected postpaid phone additions in the quarter and a more favorable financial outlook for 2026. Citi raised its target to $50 from $48, pointing to signs of a more aggressive restructuring effort that could support margin improvement and earnings stability over time. Both firms highlighted improving execution and welcomed Verizon’s plan to return $25 billion to shareholders through share repurchases.
These followed Verizon’s earnings report on January 30, 2026, when the company posted fourth-quarter revenue of $36.4 billion, slightly above the $36.2 billion consensus estimate. Postpaid phone net additions totaled 616,000, up from 504,000 a year earlier and marking the strongest quarter for that metric since 2019. CEO Dan Schulman said the quarter reflected early progress in Verizon’s turnaround, citing healthier volumes, disciplined growth, and momentum exiting 2025.
Verizon Communications Inc. (NYSE:VZ) provides communications, technology, information, and entertainment services to consumers, businesses, and government customers worldwide. The company operates through two main segments, Verizon Consumer Group and Verizon Business Group, giving it exposure across both retail and enterprise markets.
4. The Allstate Corporation (NYSE:ALL)
Number of Hedge Fund Holders: 60
Forward PE: 8.61x
ROE: 39.51%
On February 6, 2026, Wells Fargo analyst Elyse Greenspan raised the firm’s price target on The Allstate Corporation (NYSE:ALL) to $228 from $223 and maintained an Equal Weight rating. The firm said it was surprised by the size of the stock’s move following earnings, attributing it largely to positioning dynamics and recent outperformance across property and casualty insurers.
A day earlier, on February 5, 2026, JPMorgan analyst Jimmy Bhullar lifted his price target to $263 from $260 while reiterating an Overweight rating. The firm pointed to what it described as “healthy” business trends coming out of the quarter.
On February 5, 2026, the company reported fourth-quarter revenue of $17.3 billion, slightly above consensus estimates of $17.29 billion. For the full year, revenue reached $67.7 billion, while net income totaled $10.2 billion and adjusted net income came in at $9.3 billion.
During the quarter, total policies in force increased to 210.9 million, up 3.0% year over year, supported by broad distribution and product offerings. The company also reduced premiums for 7.8 million auto and homeowners customers by an average of 17% through coverage adjustments.
The Allstate Corporation (NYSE:ALL) provides property and casualty insurance and related products across the United States and Canada, operating through segments that include Allstate Protection, Protection Services, Health and Benefits, and other ancillary businesses.
3. Newmont Corporation (NYSE:NEM)
Number of Hedge Fund Holders: 74
Forward PE: 12.15x
ROE: 22.84%
On February 4, 2026, CIBC raised its price target on Newmont Corporation (NYSE:NEM) to $177 from $112 and reiterated an Outperformer rating. The move came as CIBC lifted price targets across its precious metals coverage after raising its gold price forecast to $6,000 per ounce in 2026 and $6,500 in 2027, while also increasing copper assumptions. The firm said many of the demand drivers seen in 2025 are expected to persist into 2026.
Other analysts have taken a similar view in recent weeks. On January 30, 2026, UBS raised its price target on Newmont Corporation (NYSE:NEM) to $160 from $125 and kept a Buy rating.
Earlier, on January 26, 2026, Scotiabank lifted its price target to $152 from $114 while maintaining an Outperform rating. The firm said it was updating targets across its Gold and Precious Minerals coverage after raising both gold and silver forecasts. Scotiabank cited ongoing economic uncertainty, geopolitical risks, and continued central bank buying as key factors supporting higher long-term metal prices.
Newmont Corporation (NYSE:NEM) is one of the world’s largest gold producers, with operations spanning North America, Latin America, Australia, Africa, and parts of Asia-Pacific. In addition to gold, the company has exposure to copper, silver, zinc, lead, and other metals, giving it leverage to multiple commodity markets.
2. Bristol-Myers Squibb Company (NYSE:BMY)
Number of Hedge Fund Holders: 76
Forward PE: 10.06x
ROE: 33.84%
On February 6, 2026, Guggenheim raised its price target on Bristol-Myers Squibb Company (NYSE:BMY) to $72 from $62 and reiterated a Buy rating. The firm significantly increased its estimated probability of success for iber/mezi to 90% from 33% and lifted its success odds for milvexian in SSP to 90% from 75%. Guggenheim said it continues to recommend buying the shares ahead of what it described as a series of high-profile, potentially high-reward Phase 3 catalysts.
Several other firms also updated their views following BMY’s earnings report.
Bank of America also updated its view on February 6, 2026, raising its price target to $68 from $64 while maintaining a Buy rating. The firm increased near-term forecasts following fourth-quarter results and fiscal 2026 guidance that came in ahead of expectations. BofA framed Bristol Myers as a pipeline-driven story and said Q4 commentary was supportive for several programs where safety had been an open question. The firm added that positive Phase 3 read-across from Bayer’s SSP data helps derisk the opportunity for milvexian.
Wells Fargo analyst Mohit Bansal raised his price target to $60 from $55 the same day while keeping an Equal Weight rating. Wells Fargo sees potential upside to 2026 guidance if the growth portfolio outperforms current mid-single-digit assumptions. With guidance now set, the firm said investor focus is likely to shift toward upcoming pipeline readouts in 2026, including CelMoDs, LPA1, milvexian, and Cobenfy.
Citi also weighed in on February 6, lifting its price target to $64 from $60 while reiterating a Neutral rating. The firm described fourth-quarter results as strong but said future share upside will hinge largely on pipeline execution and clinical wins.
Bristol Myers reported fourth-quarter revenue of $12.5 billion on February 5, 2026, topping the $12.28 billion consensus estimate. CEO Christopher Boerner said the company exited 2025 with momentum in its growth portfolio and a strengthened balance sheet, adding that 2026 is expected to be data-rich, with multiple pivotal pipeline readouts anticipated in the back half of the year.
Bristol-Myers Squibb Company (NYSE:BMY) discovers, develops, licenses, manufactures, markets, distributes, and sells biopharmaceutical products worldwide. It offers products for oncology, hematology, immunology, cardiovascular, neuroscience, and other areas.
1. JPMorgan Chase & Co. (NYSE:JPM)
Number of Hedge Fund Holders: 120
Forward PE: 13.93x
ROE: 16.06%
On February 5, 2026, HSBC upgraded JPMorgan Chase & Co. (NYSE:JPM) to Hold from Reduce and set a new $319 price target, following suit on other analyst rating upgrades after the stock’s recent weak performance.
A few days earlier, on February 3, 2026, Baird analyst David George upgraded JPMorgan Chase & Co. (NYSE:JPM) to Neutral from Underperform while keeping an unchanged $280 price target. Baird said recent underperformance has made the stock’s risk-reward profile “more reasonable,” even if it does not yet see a compelling case for fresh capital. Importantly, the firm said it now finds it difficult to maintain a short thesis on what it described as a best-in-class franchise. Baird added that JPMorgan remains well-positioned to gain market share across its businesses while continuing to expand margins and returns over time.
On January 29, 2026, Bloomberg reported that Jersey Mike’s Subs had tapped JPMorgan Chase & Co. and Morgan Stanley to work on a potential public listing. The Blackstone-backed sandwich chain is targeting an initial public offering as soon as the third quarter of 2026, which, if completed, would add to JPMorgan’s investment banking pipeline and support fee generation tied to equity underwriting and related capital markets activity.
On January 13, 2026, JPMorgan Chase & Co. reported fourth-quarter revenue of $45.8 billion, with managed revenue totaling $46.8 billion, modestly above the $46.25 billion consensus estimate. Alongside the results, the bank outlined key items for fiscal 2026, including net interest income excluding markets of about $95 billion, subject to market conditions. JPMorgan also guided to adjusted expenses of roughly $105 billion, excluding firmwide legal costs, and expects a card services NCO rate of around 3.4% for the year.
JPMorgan Chase & Co. (NYSE:JPM) operates as a financial services company worldwide. It operates through three segments: Consumer & Community Banking, Commercial & Investment Banking, and Asset & Wealth Management.
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