On January 26, Yahoo Finance reported that Wall Street strategists are telling investors to focus on earnings growth to drive the stock market higher in 2026. Richard Saperstein, chief investment officer at Treasury Partners, said that “we’ve got an excellent backdrop for earnings growth,” while noting that inflation is easing and the economy continues to add jobs.

Analysts expect solid results from the S&P 500 this earnings season. According to Bloomberg data, the S&P 500 is forecasted to post profit growth of approximately 8.3% year-over-year for the fourth quarter. FactSet analysts are even more optimistic, projecting growth could go higher than 14%, which would mark the fifth straight quarter of double-digit earnings growth.

33 S&P 500 companies have reported their fourth-quarter results through January 16. According to FactSet, 79% of these 33 companies have beaten analysts’ average EPS estimates.

BNY Wealth strategists also forecast earnings growth of around 14% for this year. They expect gains to be supported in part by tax incentives and benefits from capital expenditures under President Trump’s “Big Beautiful Bill,” which cut the corporate tax rate by around 3%.

With this background in mind, let’s take a look at the 11 most profitable cheap stocks to invest in now.

Our Methodology

To compile our list of the 11 most profitable cheap stocks to invest in now, we looked for cheap stocks trading at under 15 times their forward earnings as of January 26, 2026. Then, we focused on profitability and narrowed our choices to stocks that had trailing twelve-month (TTM) net income of more than $1 billion and a profit margin of more than 20%. Next, we focused on the top 11 most profitable stocks that are favored by institutional investors. Data for the hedge fund sentiment surrounding each stock was taken from Insider Monkey’s Q3 2025 database of 978 elite hedge funds. Finally, the 11 most profitable cheap stocks to invest in were ranked in ascending order based on the number of hedge funds holding stakes in them 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).

11 Most Profitable Cheap Stocks to Invest In Now

11. The Bank of New York Mellon Corporation (NYSE:BK)

Forward P/E: 14.14

Profit Margin: 27.59%

Net Income: $5.31 Billion

Number of Hedge Fund Holders: 62

The Bank of New York Mellon Corporation (NYSE:BK) is one of the most profitable cheap stocks to invest in now. On January 14, Keefe, Bruyette & Woods increased its price target on The Bank of New York Mellon Corporation (NYSE:BK) from $132 to $143 and kept its Outperform rating.

The research firm highlighted The Bank of New York Mellon Corporation’s (NYSE:BK) strong performance in its recent quarter and pointed to the new medium-term profitability targets. These include a pre-tax margin of 38% or more and a return on tangible common equity (ROTCE) of 28% or more.

Keefe, Bruyette & Woods increased its EPS estimates for The Bank of New York Mellon Corporation (NYSE:BK) for 2026 and 2027. The firm also pointed out that the company’s progress toward a high 20% ROTCE and growing net interest margin could allow for multiple expansion.

Also on January 14, RBC Capital increased its price target on The Bank of New York Mellon Corporation (NYSE:BK) from $124 to $130 and kept its Sector Perform rating. The research firm noted that the company’s “laserlike focus” on execution, which is the company’s “Northstar” metric, helps with achieving positive operating leverage.

The Bank of New York Mellon Corporation (BNY) is a leading financial services company that offers financial platforms, products, and services in the US and internationally.

10. Altria Group, Inc. (NYSE:MO)

Forward P/E: 11.20

Profit Margin: 43.98%

Net Income: $8.84 Billion

Number of Hedge Fund Holders: 64

Altria Group, Inc. (NYSE:MO) is one of the most profitable cheap stocks to invest in now. On January 26, UBS increased its price target on Altria Group, Inc. (NYSE:MO) from $63 to $67 and maintained its Buy rating on the stock.

The firm noted that risks facing the company, including worries around combustible volume mix, duty drawback benefits, and lower nicotine pouch volumes, are manageable. UBS also noted that while progress in smoke-free products is slow, Altria Group, Inc. (NYSE:MO) is still well positioned to return to revenue growth and accelerate earnings per share during 2026 and 2027.

Previously, on December 11, Altria Group, Inc. (NYSE:MO) reported that its CEO, Billy Gifford, has decided to retire, effective May 14, 2026. The Board of Directors has chosen Salvatore Mancuso to take over as the next CEO of the company. Gifford will serve as a consultant to Altria Group, Inc. (NYSE:MO) through at least the end of 2026, supporting a smooth transition.

Salvatore Mancuso has served as Altria Group, Inc.’s (NYSE:MO) Vice President and Chief Financial Officer since 2020. He has also worked in leadership positions across the company’s strategy, finance, and compliance teams.

Altria Group, Inc. (NYSE:MO) is an American company and one of the world’s biggest producers and marketers of tobacco, cigarettes, and medical products. It specializes in both combustible and smoke-free products.