In this article, we will look at the 10 Undervalued Cyclical Stocks to Invest In.

​On January 9, Alan McKnight from Regions Wealth Management and Richard Bernstein from Richard Bernstein Advisors appeared on a CNBC television interview to discuss the markets and the state of the economy. Alan noted that the consumer remains in good shape. He added that if the earnings continue to perform as they have for the past few quarters, the market and economy appear to be very healthy. On the other hand, Richard noted that 2026 is set to be a different year compared to the previous years. Richard noted that he is advising investors to consider boring investments in 2026, such as dividend-paying stocks, quality stocks, and international diversification. He added that the markets are broadening out and investors should look at fundamentally strong stocks, even if they are based outside of the United States. He further elaborated that the international markets have significantly outperformed the US market in 2025, which suggests that it is a profitable area to look at.

​Alan talked about the broadening of the market as well. He noted that 9 out of 10 sectors are hitting new highs, and the “Mag 7,” although underperforming, is finally meeting its meaningful targets. Alan noted that he is more biased on domestic large and mid-cap stocks, while being underweight on international equities.

​With that, let’s take a look at the 10 Undervalued Cyclical Stocks to Invest In, to analyze some of the cheap names in the consumer cyclical sector.

​Our Methodology

To curate the list of 10 Undervalued Cyclical Stocks to Invest In, we used the Finviz stock screener, Seeking Alpha, and Insider Monkey’s Q3 2025 database. Using the screener, we aggregated a list of consumer cyclical stocks trading under the FWD P/E ratio of 15. Next, we cross-checked the FWD P/E from Seeking Alpha and the number of Hedge Fund Holders from Insider Monkey. Lastly, we ranked the stocks in ascending order of the number of hedge fund holders.

​​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 Undervalued Cyclical Stocks to Invest In

​10. Trip.com Group Limited (NASDAQ:TCOM)

Forward P/E Ratio: 11.77

Number of Hedge Fund Holders: 37

​Trip.com Group Limited (NASDAQ:TCOM) is one of the Undervalued Cyclical Stocks to Invest In. Trip.com Group Limited (NASDAQ:TCOM) has gained more than 22% over the past 6 months, and Wall Street sees more than 16% upside from the current levels.

Recently, on December 9, Trip.com Group Limited (NASDAQ:TCOM) announced its strategic partnership with Galaxy Asia Car Rental, which is Malaysia’s top car rental firm. Management noted that the deal integrates the company’s branding in Galaxy’s high traffic areas, including the Kuala Lumpur flagship store and at KLIA Terminals 1 and 2. The company believes that this move will help boost visibility and will also combine its international user base with Galaxy’s local user base.

This partnership is also important because the company’s data suggests that the Malaysian car rental market is booming and has achieved triple-digit growth year-over-year. This growth is driven by users from Malaysia, China, and Singapore. Management of Trip.com Group Limited (NASDAQ:TCOM) noted that the partnership aligns with the company’s end-to-end travel ecosystem linking global planning with local execution, thereby capitalizing on rising regional demand.

​Trip.com Group Limited (NASDAQ:TCOM) provides end-to-end solutions for the corporate travel, lodging, tour, and transportation sectors.

9. PulteGroup, Inc. (NYSE:PHM)

Forward P/E Ratio: 10.84

Number of Hedge Fund Holders: 42

​PulteGroup, Inc. (NYSE:PHM) is one of the Undervalued Cyclical Stocks to Invest In. Wall Street has a positive opinion on PulteGroup, Inc. (NYSE:PHM). Recently, on January 9, Michael Dahl from RBC Capital reiterated a Hold rating on the stock and lowered the price target slightly from $112 to $111. Earlier on January 7, Citizens reiterated a Buy rating on the stock with a $145 price target.

​RBC Capital noted that they remain cautious on the housing sector during early 2026, mainly due to the challenging housing affordability. The firm expects the R&R to reach an inflection point later during the year. Moreover, the firm also highlighted the challenges in the nonresidential market, noting policy changes, tariffs, and rates as key challenges for the sector. The firm added that while the housing sector is expected to remain volatile, building products OEMs offer considerably better valuations.

​On the other hand, Citizens noted that they like the company’s revenue mix, which mainly focuses on move-up and adult buyers. The firm believes that this allows the company to move past the mortgage rate volatility and affordability challenges for new buyers in 2026.

Moreover, the firm also highlighted that PulteGroup, Inc. (NYSE:PHM) generates around two-thirds of its average annual sales from move-up and active adult buyers, thereby providing the company with a significant edge over its competitors.

​PulteGroup, Inc. (NYSE:PHM) is engaged in the homebuilding business in the US.