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.
9. First Solar, Inc. (NASDAQ:FSLR)
Forward P/E: 11.06
Profit Margin: 27.73%
Net Income: $1.40 Billion
Number of Hedge Fund Holders: 67
First Solar, Inc. (NASDAQ:FSLR) is one of the most profitable cheap stocks to invest in now. On January 22, KeyBanc reiterated its Underweight rating on First Solar, Inc. (NASDAQ:FSLR) with a price target of $150. The firm was unimpressed by the stock’s year-to-date performance and also pointed to ongoing challenges in the solar market.
KeyBanc noted that upcoming solar regulatory changes could impact the market. The research firm said that it does not agree with the current bullish expectations in the market, noting that “this time is not meaningfully different from past cycles” in the solar sector.
Earlier, on January 12, Raymond James initiated coverage on First Solar, Inc. (NASDAQ:FSLR), giving the stock a Market Perform rating. The firm said that the company offers a “relatively compelling risk/reward” compared with other stocks in its coverage.
However, Raymond James was reluctant to fully support what seems to be a consensus bullish outlook by analysts. The firm pointed out that most of the potential positives are already known and likely reflected in the current valuation of First Solar, Inc. (NASDAQ:FSLR).
First Solar, Inc. (NASDAQ:FSLR) is an American PV solar technology and manufacturing company. It is known for its advanced, uniquely American thin film PV technology.
8. PDD Holdings Inc. (NASDAQ:PDD)
Forward P/E: 8.89
Profit Margin: 24.43%
Net Income: $14.37 Billion
Number of Hedge Fund Holders: 73
PDD Holdings Inc. (NASDAQ:PDD) is one of the most profitable cheap stocks to invest in now. On January 15, Morgan Stanley reaffirmed its Overweight rating on PDD Holdings Inc. (NASDAQ:PDD) with a $148 price target but removed the stock from its Top Pick list because of rising regulatory risks and broader market uncertainty affecting Chinese internet companies.
Morgan Stanley pointed out that “the investigation into food delivery platforms launched by The General Office of Anti-Monopoly and Anti-Unfair Competition Commission” has heightened uncertainty for the sector. According to the firm, a slower recovery in consumer spending in China could pose additional headwinds for e-commerce platforms, including PDD Holdings Inc. (NASDAQ:PDD), in 2026. Morgan Stanley also identified intense competition in China’s e-commerce market as another factor weighing on the company’s outlook. Despite this, the firm remains positive on PDD Holdings Inc. (NASDAQ:PDD) with an Overweight rating.
Previously, on January 6, Freedom Capital Markets increased its price target on PDD Holdings Inc. (NASDAQ:PDD) from $140 to $170 and kept its Buy rating. The research firm pointed out that the company has shown resilience by adjusting to US tariffs and the removal of the de minimis duty-free threshold on shipments from China.
However, despite the increase in price target, Freedom Capital Markets cautioned that pressure on margins is expected to continue, at least in the medium term, as PDD Holdings Inc. (NASDAQ:PDD) focuses on long-term investments.
PDD Holdings Inc. (NASDAQ:PDD), formerly Pinduoduo Inc., is a multinational commerce group best known for its e-commerce platforms, Pinduoduo and Temu.
7. Newmont Corporation (NYSE:NEM)
Forward P/E: 14.57
Profit Margin: 33.42%
Net Income: $7.19 Billion
Number of Hedge Fund Holders: 74
Newmont Corporation (NYSE:NEM) is one of the most profitable cheap stocks to invest in now. On January 26, Scotiabank increased its price target on Newmont Corporation (NYSE:NEM) from $114 to $152 and maintained its Outperform rating on the stock.
This decision comes as the firm is updating its price targets for gold and precious minerals companies under its coverage. Scotiabank raised its gold and silver price forecasts, citing ongoing economic and geopolitical uncertainty, along with central bank buying.
Earlier, on January 12, Citi raised its price target on Newmont Corporation (NYSE:NEM) from $104 to $118 and maintained its Buy rating. Citi pointed out that it is neutral on gold prices after the recent strong rally and expects some price moderation through the year.
Before that, on December 29, Raymond James also raised its price target on Newmont Corporation (NYSE:NEM) from $99 to $111 and kept its Outperform rating. The firm highlighted the company’s exposure to gold through a global portfolio with lower jurisdictional risk. This supports solid cash flow generation. Raymond James also pointed to Newmont Corporation’s (NYSE:NEM) flexible balance sheet, which provides the company with financial stability.
Newmont Corporation (NYSE:NEM) is a gold mining company that also produces copper, zinc, lead, and silver. It is one of the largest gold mining companies in the world.
6. Barrick Mining Corporation (NYSE:B)
Forward P/E: 13.61
Profit Margin: 24.53%
Net Income: $3.58 Billion
Number of Hedge Fund Holders: 75
Barrick Mining Corporation (NYSE:B) is one of the most profitable cheap stocks to invest in now. On January 26, Scotiabank raised its price target on Barrick Mining Corporation (NYSE:B) from $43 to $63 and kept its Outperform rating on the stock.
This update came as the firm updates its price targets across the gold and precious minerals sector. Scotiabank has lifted its gold and silver price forecasts, pointing to ongoing economic and geopolitical uncertainty and strong central bank buying.
On January 23, Canaccord lifted its price target on Barrick Mining Corporation (NYSE:B) from C$70 to C$80 and maintained its Buy rating on the stock.
Earlier, on January 19, BofA Securities also raised its price target on Barrick Mining Corporation (NYSE:B) from $50 to $58 while keeping a Buy rating. The research firm raised its price targets on North American precious metals companies. BofA noted that many of the macroeconomic factors driving gold prices higher “have intensified.”
Barrick Mining Corporation (NYSE:B) is a leading mining, exploration, and development company with one of the strongest portfolios of gold and copper assets.
5. Wells Fargo & Company (NYSE:WFC)
Forward P/E: 12.55
Profit Margin: 26.66%
Net Income: $20.29 Billion
Number of Hedge Fund Holders: 76
Wells Fargo & Company (NYSE:WFC) is one of the most profitable cheap stocks to invest in now. On January 15, Truist Securities reduced its price target on Wells Fargo & Company (NYSE:WFC) from $104 to $100 and kept its Buy rating. The firm reduced its EPS estimates for 2026 and 2027 mainly because of lower expected fee income and higher expenses.
Truist Securities lowered its 2026 EPS forecast for Wells Fargo & Company (NYSE:WFC) from $7.15 to $6.95 and its 2027 EPS forecast to $8.00, which is $0.15 less than its earlier forecast. The research firm updated its outlook to incorporate about 5% annual revenue growth and expense growth of 1-2% over the next two years. This aligns with the company’s updated expense guidance of about $55.7 billion in 2026.
Also on January 15, Evercore ISI lowered its price target on Wells Fargo & Company (NYSE:WFC) from $110 to $105 and kept its Outperform rating. This decision came after the company reported Q4 2025 results.
Evercore ISI reduced its EPS estimates for 2026 and 2027 by 1% and 2%, respectively, to $7.17 and $8.32. These revisions reflect expectations of slightly lower net interest income.
Wells Fargo & Company (NYSE:WFC) is an American multinational financial services company that provides a wide range of banking, investment, and mortgage products and services. The company also specializes in consumer and commercial finance.
4. Adobe Inc. (NASDAQ:ADBE)
Forward P/E: 12.83
Profit Margin: 30.00%
Net Income: $7.13 Billion
Number of Hedge Fund Holders: 88
Adobe Inc. (NASDAQ:ADBE) is one of the most profitable cheap stocks to invest in now. On January 12, Goldman Sachs downgraded its rating on Adobe Inc. (NASDAQ:ADBE) from Buy to Sell and set a price target of $290. This downgrade came as analyst Gabriela Borges assumed coverage of the software company.
Goldman Sachs pointed out that the company’s near-term revenue growth is expected to be about 10%, which is below the 11% average seen among its peers. The firm also pointed to lower EPS growth of 10% compared with 18% for peers. Goldman Sachs highlighted concerns that Adobe Inc.’s (NASDAQ:ADBE) earnings could face more pressure if the company spends more on AI initiatives or if revenue growth falls to less than 10%.
Earlier, on January 9, BMO Capital downgraded its rating on Adobe Inc. (NASDAQ:ADBE) from Outperform to Market Perform and cut its price target from $400 to $375. The research firm sees rising competitive dynamics in the creative market. While BMO Capital sees Adobe Inc.’s (NASDAQ:ADBE) current valuation as “undemanding,” it does not see any positive catalysts and believes the stock will remain range-bound.
On January 5, Jefferies also downgraded its rating on Adobe Inc. (NASDAQ:ADBE) from Buy to Hold and lowered its price target from $500 to $400. Jefferies pointed to rising competition in the lower-end segment of the market, where casual users now have access to many AI-powered alternatives to Adobe Inc.’s (NASDAQ:ADBE) Creative Cloud suite.
Adobe Inc. (NASDAQ:ADBE) is a global leader in digital media and digital marketing solutions. It provides creator tools and services to individuals, teams, and enterprises to create, publish, and promote content.
3. Micron Technology, Inc. (NASDAQ:MU)
Forward P/E: 10.34
Profit Margin: 28.15%
Net Income: $11.91 Billion
Number of Hedge Fund Holders: 105
Micron Technology, Inc. (NASDAQ:MU) is one of the most profitable cheap stocks to invest in now. On January 23, HSBC increased its price target on Micron Technology, Inc. (NASDAQ:MU) from $350 to $500 and kept its Buy rating. The firm noted that the sharp rise in DRAM prices was a major reason behind the strong gains in the share price over the past three months.
HSBC now expects Micron Technology, Inc. (NASDAQ:MU) to report Q2 fiscal 2026 operating profit of $12 billion, which would be an increase of 88% quarter-over-quarter. The research firm forecasts sales of $20 billion, up 47% compared to the previous quarter. HSBC forecasts DRAM blended average selling prices to see a 45% increase quarter-over-quarter, up from its earlier forecast of 37%.
Earlier, on January 22, William Blair initiated coverage of Micron Technology, Inc. (NASDAQ:MU) with an Outperform rating. The firm believes that the company is in a strong position to see sharp profit growth as rising AI-driven demand meets ongoing supply constraints that could continue into 2027.
William Blair expects a multi-year upcycle in the memory market to support higher pricing and margins, primarily by high-bandwidth memory (HBM) used in AI accelerators. The firm noted that memory has become a bottleneck in AI systems, which is making customers shift toward higher-performance products that come with higher selling prices. William Blair forecasts Micron Technology, Inc.’s (NASDAQ:MU) non-GAAP EPS to grow by over 275% over the next two years.
Micron Technology, Inc. (NASDAQ:MU) is a leading semiconductor technology company that is known for its innovative memory and storage solutions. The company offers a portfolio of high-performance DRAM, NAND, and NOR memory and storage products.
2. Bank of America Corporation (NYSE:BAC)
Forward P/E: 11.93
Profit Margin: 28.40%
Net Income: $29.06 Billion
Number of Hedge Fund Holders: 111
Bank of America Corporation (NYSE:BAC) is one of the most profitable cheap stocks to invest in now. On January 15, TD Cowen reduced its price target on Bank of America Corporation (NYSE:BAC) from $66 to $64 and kept its Buy rating. This update comes after the company reported Q4 2025 core earnings per share of $0.98, which was above market expectations. This beat was mainly driven by lower provisions and a slight upside in net interest income.
Despite this, Bank of America Corporation (NYSE:BAC) shares fell after the results. TD Cowen said the decline was largely linked to the company’s near-term operating leverage guidance of about 200 basis points for fiscal year 2026. This number is now at the lower end of the company’s medium-term target range of 200 to 300 basis points. TD Cowen analyst Steven Alexopoulos pointed out that Bank of America Corporation’s (NYSE:BAC) revenue growth outlook is still largely intact.
On January 15, Keefe, Bruyette & Woods reduced its price target on Bank of America Corporation (NYSE:BAC) from $64 to $63 and kept an Outperform rating.
Also on January 15, Truist Securities cut its price target on Bank of America Corporation (NYSE:BAC) from $62 to $60 and maintained its Buy rating. This change reflects small updates to the firm’s provision assumptions and expectations for a slower pace of share buybacks by Bank of America Corporation (NYSE:BAC).
Bank of America Corporation (NYSE:BAC) is a global banking and financial services corporation that offers banking, investing, asset management, and other financial and risk management products and services to individual consumers, small and middle-market businesses, and large corporations.
1. JPMorgan Chase & Co. (NYSE:JPM)
Forward P/E: 13.85
Profit Margin: 33.91%
Net Income: $55.68 Billion
Number of Hedge Fund Holders: 120
JPMorgan Chase & Co. (NYSE:JPM) is one of the most profitable cheap stocks to invest in now. On January 22, Reuters reported that JPMorgan Chase & Co. (NYSE:JPM) has completed a deal to acquire WealthOS, a UK-based pensions technology platform. This information comes from an internal memo seen by Reuters.
This transaction is expected to strengthen JPMorgan Chase & Co.’s (NYSE:JPM) presence in the pensions industry and position the company to benefit from the growing demand for retirement planning products that offer stable income in later life.
WealthOS operates a technology-focused wealth management platform and has employees in Sri Lanka and the UK. According to the memo sent by Edmund Cohen, head of pensions and wealth products at JPMorgan Chase & Co. (NYSE:JPM), all of the WealthOS workforce will join the company. J.P. Morgan Personal Investing aims to use WealthOS’s technology to improve its pensions offerings.
Earlier, on January 7, BofA Securities increased its price target on JPMorgan Chase & Co. (NYSE:JPM) from $350 to $362 and kept its Buy rating. The research firm pointed to the company’s strength in technology, including digital banking and blockchain. BofA Securities believes that this offers JPMorgan Chase & Co. (NYSE:JPM) “significant strategic optionality” to grow client wallet share and grow its revenue.
JPMorgan Chase & Co. (NYSE:JPM) is an American multinational financial services firm with leading positions in investment banking, financial services for consumers and small businesses, commercial banking, financial transaction processing, and asset management.
While we acknowledge the potential of JPM as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than JPM and that has a 100x upside potential, check out our report about this cheapest AI stock.
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