Kevin Warsh, Donald Trump’s pick to be the next chair of the Federal Reserve, could be good news for the stock market, at least in the near term. This claim is from Dan Niles, founder and portfolio manager at Niles Investment Management, in an interview with CNBC’s Money Movers on January 31.
Niles’s reasoning was simple. Warsh believes that AI will be a significant deflationary force (as Warsh wrote in his Wall Street Journal op-ed entitled “The Federal Reserve’s Broken Leadership”). Therefore, he might believe he can get away with lowering interest rates, since the productivity gains and deflationary pressures from adopting artificial intelligence will mitigate inflation. As such, Niles said that he would not be surprised to see another 100 basis points in rate cuts from the Federal Reserve in 2026. Lower rates would then lead to higher stock trading multiples.
Sam Altman echoed this sentiment regarding the deflationary impact of AI in an OpenAI town hall on January 27:
”Given, certainly, progress with work you can do in front of a computer, but also what looks like it will soon happen with robotics and a bunch of other things, we’re going to have massively deflationary pressure.”
Given the deflationary pressures from the broader adoption of AI, which would translate into lower interest rates and ultimately higher trading multiples, let us review 12 stocks that are currently trading at cheap P/E ratios.
Stock market data showing an upward trajectory. Photo by Burak The Weekender on Pexels
Our Methodology
We shortlisted stocks that trade in the US market with at least $2 billion in market cap, at least three analysts covering the stock, and are trading at less than 15x forward P/E. We then selected 12 stocks most favored by hedge funds based on Insider Monkey’s proprietary hedge fund database, which tracks 978 stocks as of Q3 2025.
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).
12. ONEOK Inc. (NYSE:OKE)
Upside: 4.81%
Forward P/E Ratio: 13.23x
Number of Hedge Fund Holders: 42
ONEOK, Inc. (NYSE:OKE) is one of the Best Cheap Stocks to Buy Right Now.
From January 22 to 28, several firms updated their target prices on ONEOK. Jeremy Tonet at JPMorgan cut his target price on ONEOK to $84 (from $87) and downgraded the rating to “Neutral” (from “Overweight”), citing soft macroeconomic fundamentals. He also added that oil prices would likely need to rise before investor sentiment for this stock improves. Meanwhile, Robert Kad of Morgan Stanley also lowered their target price on ONEOK to $104 (from $107) but kept their “Overweight” rating. UBS also cut its target price to $103 (from $114) while keeping a “Buy” rating.
These target price adjustments followed ONEOK’s January 21 announcement that it will raise its quarterly dividend by ~4%, from $1.03 per share to $1.07 per share. On an annual basis, this comes out to $4.28 per share, implying a dividend yield of 4.81%. The company’s 2025 results will be released by 23 February 2026.
Despite recent cuts to the target price, analysts remain favorable on the stock. According to CNN’s data, 14 of 24 analysts (~58%) covering OKE have a “Buy” rating, while 10 (~42%) have a “Hold.” The median target price is $83 (with a high of $108), implying an upside of 4.81% (41.14% if using the highest estimate).
ONEOK, Inc. (NYSE:OKE) is a natural gas player based in Tulsa, Oklahoma. The company gathers, processes, transports, and stores natural gas in North Dakota, Montana, Wyoming, Kansas, Oklahoma, Texas, and New Mexico.
11. American Airlines Group Inc. (NASDAQ:AAL)
Upside: 27.30%
Forward P/E: 6.66x
Number of Hedge Fund Holders: 43
American Airlines Group Inc. (NASDAQ:AAL) is one of the Best Cheap Stocks to Buy Right Now.
American Airlines released its Q4-2025 results last January 27, which showed record fourth-quarter and full-year revenue of $14 billion and $54.6 billion, respectively. The strong numbers came despite an estimated $325 million hit from the government shutdown. In addition to higher revenue, the company was also able to reduce its net debt by $2.1 billion.
Moving forward, American Airlines’ CEO Robert Isom says the company is “positioned for significant upside in 2026.” He projects total revenue to grow 7-10% in the 1st quarter of 2026. As for earnings, EPS is expected to be ~$1.70 to $2.70 per share, which is 10x to 16x of 2025’s results.
The (1) above consensus Q4 results, (2) strong management guidance for 2026, and (3) reduction in debt were key reasons why BMO Capital raised its target price from $16.75 up to $17.00 on January 28. The firm also added that if the demand momentum from January continues, the top end of management’s 2026 guidance could be in play. On the same day, JP Morgan also raised their target price (from $20 to $22) after updating their model post earnings report.
Still on the topic of target prices, CNN’s data shows that 15 out of 28 analysts (~54%) covering AAL have a “Buy” rating on the company, 12 (~43%) have a “Hold” rating, with only one (~4%) having a “Sell” recommendation. The median target price is $17.32 (with a high of $22.00), implying an upside of 27.30% (61.65% if using the highest estimate).
American Airlines Group Inc. (NASDAQ:AAL), through its subsidiaries, offers passenger and cargo air transportation services in the United States, Latin America, the Atlantic, and the Pacific.
10. Strategy Inc (NASDAQ:MSTR)
Upside: 200.00%
Forward P/E: 2.36x
Number of Hedge Fund Holders: 43
Strategy Inc (NASDAQ:MSTR) is one of the Best Cheap Stocks to Buy Right Now.
Strategy, according to an SEC filing, acquired an additional 855 bitcoin (BTC) for $75.3 million (implying an average acquisition price of $87,974) between January 26 and February 1. Just the week prior, from January 20 to 25, Strategy already spent $264.1 million to purchase 2,932 BTC at an average price of $90,061. The company funded both of these purchases through the sale of STRC and MSTR stock in the same period.
This latest batch of purchases would bring the company’s stockpile to 713,502 BTC, with an aggregate cost of $54.26 billion (an average acquisition price of $76,047).
On a separate topic, CNN’s data shows that 15 out of 17 analysts (~88%) covering MSTR have a “Buy” rating on the company, with the remaining two (~12%) having a “Hold” recommendation. The median target price is $445 (with a high of $705), implying an upside of around 200% (401.96% if using the highest estimate).
Note: Between the data gathering date and publication date, the price of MSTR has fallen by ~10.9%. This coincides with a 10.5% drop in Bitcoin prices (from $79,000 to $70,000) over the same period. As such, Bitcoin’s price is now below MSTR’s break-even price/cost of acquisition.
Strategy Inc (NASDAQ:MSTR) is an enterprise analytics and mobility software provider. The company, which was founded by Michael Saylor and Sanjeev Bansal, has adopted Bitcoin as its primary treasury asset.
9. Coterra Energy Inc. (NYSE:CTRA)
Upside: 17.21%
Forward P/E: 12.93x
Number of Hedge Fund Holders: 47
Coterra Energy Inc. (NYSE:CTRA) is one of the Best Cheap Stocks to Buy Right Now.
Coterra Energy and Devon Energy announced on February 2 a $58 billion all-stock merger, which would make the combined company one of the largest shale producers in the Permian Basin. Combined, these companies currently produce an equivalent of 1.6 million barrels of oil per day. As part of the deal, Coterra shareholders will receive 0.70 shares for each share held. Devon will effectively own 54% of the combined company.
On the announcement, Clay Gaspar, Devon’s President and CEO, said,
We’ve now built a diverse asset base of high-quality, long-duration inventory to drive resilient value creation and returns for shareholders through cycles. Underpinned by our leading position in the best part of the Delaware Basin and a deep set of complementary assets, we expect to capture annual pre-tax synergies of $1 billion. This will drive higher free cash flow and greater shareholder returns beyond what either company could achieve alone.
Several firms updated their target prices for Coterra Energy immediately after the deal announcement. Susquehanna raised its target price to $34 (up from $32) and maintained a “Positive” rating. The firm also noted that it expects this merger to be value accretive.
Roth Capital, meanwhile, trimmed its target price to $28 (down from $30). They noted that they do not expect other players such as ConocoPhillips, Chevron, or EOG Resources to make their own bid for Coterra Energy.
Still, on the topic of target prices, CNN’s data show that 25 of 31 analysts (~81%) covering CTRA have a “Buy” rating, with the remaining six (~19%) having a “Hold” recommendation. The median target price is $33 (with a high of $40), implying an upside of 17.21% (42.07% if using the highest estimate).
Coterra Energy Inc. (NYSE:CTRA) is an independent oil and gas company operating in the Permian Basin.
8. The Gap, Inc. (NYSE:GAP)
Upside: 12.58%
Forward P/E: 12.45x
Number of Hedge Fund Holders: 49
The Gap, Inc. (NYSE:GAP) is one of the Best Cheap Stocks to Buy Right Now.
On January 30, Goldman Sachs raised its target price on GAP by 10.3% (from $29 to $32). At the same time, they also reiterated their “Buy” rating on the company. In their report, they mentioned that Gap’s brand momentum will play a key role in allowing the company to overcome weak early Q1-2026 trends (due to weather, soft labor market, and weakening consumer confidence), which could lead to volatility in the near term, and ultimately outperform the industry.
This latest target revision from Goldman Sachs follows a series of target price and rating upgrades from other firms in early January. UBS raised their target price to $41 (up from $26) and upgraded to a “Buy” rating (from “Neutral”), as Gap’s beauty and handbag businesses start to payoff. Barclays also raised their target price to $33 (up from $30), citing lower interest rates and gas prices as catalysts for consumer demand.
On target prices, CNN’s data show that 13 of 20 analysts (~65%) covering Gap have a “Buy” rating, with the remaining seven (~35%) having a “Hold” recommendation. The median target price is $31.50 (with a high of $41.00), implying an upside of 12.58% (46.53% if using the highest estimate).
The Gap, Inc. (NYSE:GAP) is a global apparel retailer, operating a portfolio of global brands, such as Gap, Old Navy, Banana Republic, and Athleta. The company was founded in July 1969 by Donald G. Fisher and Doris F. Fisher and is headquartered in San Francisco.
7. The Hartford Insurance Group, Inc. (NYSE:HIG)
Upside: 10.32%
Forward P/E: 10.04x
Number of Hedge Fund Holders: 49
The Hartford Insurance Group, Inc. (NYSE:HIG) is one of the Best Cheap Stocks to Buy Right Now.
Hartford Insurance released its Q4-2025 results on January 30, which showed the company beating analyst consensus by posting a fourth-quarter EPS of $4.06 (vs. $3.22 consensus street estimates). The beat was driven by 6.3% YoY Q4 revenue growth (from $6.9 billion to $7.3 billion), as well as an improvement in the company’s expense ratio, which allowed Hartford to deliver $3.8 billion in core earnings, with a return on equity of 19.4%.
As a result of this earnings beat, Roth Capital, on January 30, increased its target price on Hartford Insurance by 12.5%, from $120 up to $135. The firm cited lower catastrophe losses and higher investment yields as key factors in their decision.
Wells Fargo, on February 1, also raised its target price slightly, from $153 up to $156 (+2.0%) and kept an “Overweight” rating on Hartford, citing the earnings beat as well as the improvement in the company’s expense ratios.
On target prices, CNN’s data shows that 14 out of 27 analysts (~52%) covering HIG have a “Buy” rating on the company. The median target price is $149 (with a high of $165), implying an upside of 10.32% (22.17% if using the highest estimate).
The Hartford Insurance Group, Inc. (NYSE:HIG) is an insurance and financial services company operating mainly in the following segments: Commercial Lines (workers’ compensation, property, vehicle, etc. insurance), Group Benefits (life, accident, disability, and retirement insurance), and Hartford Funds (retail investment services). The company was started by Terry Nathaniel on May 10, 1810, and is based in Hartford, CT.
6. Brinker International, Inc. (NYSE:EAT)
Upside: 21.73%
Forward P/E: 14.17x
Number of Hedge Fund Holders: 51
Brinker International, Inc. (NYSE:EAT) is one of the Best Cheap Stocks to Buy Right Now.
Brinker International released its Q2-FY2026 results on January 28, which showed the company’s revenue growing 6.9% YoY (from $1.35 billion to $1.44 billion) and operating income increasing by 7.9% YoY (from $156.0 million to $168.4 million), outperforming consensus estimates. The strong quarter was driven mainly by Chili’s, which posted same-store sales growth of +8.6% YoY.
Following strong Q2 results, the company is raising its full-year revenue guidance by ~2.3% to 2.9% (from an initial range of $5.60-5.70 billion to $5.76-5.83 billion). They expect this to translate to a ~3.3 to 5.6% increase in EPS guidance (from an initial guidance of $9.90-10.50 per share to $10.45-10.85 per share).
Still on the topic of target prices, CNN’s data shows that 16 out of 22 analysts (~73%) covering EAT have a “Buy” rating on the company, with the remaining six (~27%) having a “Hold” recommendation. The median target price is $192 (with a high of $210), implying an upside of 21.73% (33.15% if using the highest estimate).
Brinker International, Inc. (NYSE:EAT) is a casual dining restaurant operator best known for Chili’s Grill & Bar and Maggiano’s Little Italy. Founded in 1975 and headquartered in Dallas, Texas, the company owns, operates, or franchises more than 1,600 restaurants across the United States and 27 other countries.
5. BioMarin Pharmaceutical Inc. (NASDAQ:BMRN)
Upside: 70.68%
Forward P/E: 13.77x
Number of Hedge Fund Holders: 54
BioMarin Pharmaceutical Inc. (NASDAQ:BMRN) is one of the Best Cheap Stocks to Buy Right Now.
Barclays initiated coverage of BioMarin on January 28, assigning it an “Overweight” rating and a target price of $80. This target price implies a 41.5% upside from the current price. The firm’s analyst notes that the company’s acquisition plans and “strong fundamentals” are key reasons for their overweight call.
One of those acquisition targets in the pipeline is Amicus Therapeutics, Inc. BioMarin recently finalized the syndication of a $2 billion senior secured term loan B. The proceeds of the debt will be used, together with an $800 million loan it previously raised and a $600 million revolving credit line, to fund the planned acquisition.
On target prices, CNN’s data show that 21 of 27 analysts (~78%) covering BMRN have a “Buy” rating, with the remaining six (~22%) having a “Hold” recommendation. The median target price is $96.50 (with a high of $122), implying an upside of 70.68% (115.78% if using the highest estimate).
BioMarin Pharmaceutical Inc. (NASDAQ:BMRN) is a global biotech company focused on rare genetic diseases, founded in 1997 and headquartered in San Rafael, California.
4. Verizon Communications Inc. (NYSE:VZ)
Upside: 5.57%
Forward P/E: 9.12x
Number of Hedge Fund Holders: 60
Verizon Communications Inc. (NYSE:VZ) is one of the Best Cheap Stocks to Buy Right Now.
Verizon released its Q4-2025 results on January 30, which showed that the company added 1.1 million net new subscribers and expanded its fiber coverage to 30 million homes. This strong 4th quarter allowed the company to post 2.5% YoY growth in its annual revenue (from $134.8 billion to $138.2 billion), 0.5% YoY growth in its annual operating cash flows (from $36.9 billion to $37.1 billion), and 1.5% YoY growth in its annual free cash flow to firm (from $19.8 billion to $20.1 billion). Verizon CEO Dan Schulman also presented their guidance for 2026: +2-3% revenue growth, +4-5% adjusted EPS growth, and +7% free cash flows to the firm.
In light of these results, Eric Luebchow of Wells Fargo raised their target price on Verizon by $3 (from $41 up to $44), while retaining an “Equal Weight” rating. He cites strong new subscriber adds (highest since 2019) and a $5 billion reduction in capital costs as catalysts for the target price increase.
Morgan Stanley also raised their target price by $2 (from $47 up to $49), while retaining an “Equal Weight” rating. The firm noted that the lower CapEx spend guidance from management led the firm to increase its free cash flow forecast, which in turn led to the slight rise in the target price.
CNN’s data show that 11 of 28 analysts (~39%) covering Verizon have a “Buy” rating, 16 (~57%) have a “Hold,” and only 1 (~4%) has a “Sell.” The median target price is $47 (with a high of $70), implying an upside of 5.57% (57.23% if using the highest estimate).
Verizon Communications Inc. (NYSE:VZ), founded in 1983 and located in New York, NY, is a leading provider of communications and information services in the United States.
3. Wix.com Ltd. (NASDAQ:WIX)
Upside: 84.25%
Forward P/E: 13.02x
Number of Hedge Fund Holders: 71
Wix.com Ltd. (NASDAQ:WIX) is one of the Best Cheap Stocks to Buy Right Now.
On January 28, Wix’s Board of Directors authorized a $2 billion securities buyback plan. The program will run for two years (FY 2026 to FY 2027) and will allow the company to repurchase either its ordinary shares or its convertible notes. For reference, the company’s total liabilities and equity as of 30 September 2025 was $2.56 billion.
Despite the buy back plan, Ken Wong from Oppenheimer has concerns regarding Wix’s revenue growth and margin trajectory. As such, he trimmed the firm’s target price on Wix down to $130 (from $160), but still retained their “Outperform” call on the shares.
CNN’s data shows that 23 out of 25 analysts (~92%) covering WIX have a “Buy” rating on the company, with the remaining two (~8%) having a “Hold” recommendation. The median target price is $160 (with a high of $205), implying an upside of 84.25% (136.07% if using the highest estimate).
Wix.com Ltd. (NASDAQ:WIX) provides a creator-focused web development platform delivered via a software-as-a-service model, offering tools such as site building and templates, hosting and domains, an apps marketplace, mobile app creation, accessibility capabilities, and AI-assisted website creation. The company was founded on October 5, 2006, by Avishai Abrahami, Nadav Abrahami, Nir Zohar, and Giora Kaplan, and is headquartered in Tel Aviv, Israel.
2. General Motors Company (NYSE:GM)
Upside: 19.05%
Forward P/E: 6.93x
Number of Hedge Fund Holders: 71
General Motors Company (NYSE:GM) is one of the Best Cheap Stocks to Buy Right Now.
As part of GM’s Q4-2025 earnings press release, the company announced a $0.03 per share increase in its quarterly dividend rate. This represents a 20% increase, bringing quarterly dividends to $0.18 per share and annual dividends to $0.72. These dividend rates imply an annual dividend yield of 0.86%.
In addition to the higher dividend rate, the company also approved a $6 billion share repurchase program. For reference, the company has a market capitalization of ~$76 billion. As such, a $6 billion buyback plan could improve EPS by ~8.6%.
Considering the earnings beat and the new capital return initiatives, 10 firms increased their target price on General Motors, including Goldman Sachs (from $98 up to $104, “Buy”), TD Cowen (from $110 up to $122, “Buy”), and Barclays (from $100 up to $110, “Overweight”).
On target prices and analyst ratings, CNN’s data show that 16 out of 26 analysts (~32%) covering General Motors have a “Buy” rating on the company, 9 out of 26 (~35%) have a “Hold” recommendation, with only one (~4%) having a “Sell” recommendation. The median target price is $100 (with a high of $122), implying an upside of 19.05% (45.24% if using the highest estimate).
General Motors Company (NYSE:GM) is a leading automobile designer, manufacturer, and seller based in Detroit, Michigan.
1. AT&T Inc. (NYSE:T)
Upside: 13.51%
Forward P/E: 11.90x
Number of Hedge Fund Holders: 84
AT&T Inc. (NYSE:T) is one of the Best Cheap Stocks to Buy Right Now.
AT&T beat street consensus in the fourth quarter of 2025, both in terms of revenue ($33.5 billion actual vs. $32.88 billion consensus estimate) and earnings per share ($0.52 per share actual vs. $0.47 per share consensus estimate). John Stankey, AT&T’s Chairman and CEO, also announced management’s guidance for the following year: +1-4% revenue growth, +3-4% EBITDA growth, and $2.25 to $2.35 EPS. In terms of returning capital to shareholders, management expects to pay a $1.11 per-share dividend and buy back $8 billion in ordinary shares in 2026.
Firms had mixed reactions, despite AT&T’s strong Q4 performance. Deutsche Bank analyst Bryan Kraft raised his target price from $31 to $33, citing strong Q4 results and management’s 2026 guidance. Oppenheimer, meanwhile, lowered its target price from $32 to $29 (albeit still with an Outperform rating), citing weaker ARPU growth and higher churn. TD Cowen also slightly lowered its target from $33 to $32.
CNN’s data show that 16 of 28 analysts (~57%) covering AT&T have a “Buy” rating, 11 (~39%) have a “Hold,” and only 1 (~4%) has a “Sell.” The median target price is $29.75 (with a high of $34.00), implying an upside of 13.51% (29.72% if using the highest estimate).
AT&T Inc. (NYSE:T) is a leading telecommunications and technology company, operating mainly in the US and Latin America.
While we acknowledge the potential of AT&T Inc. (NYSE:T) to grow, 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 T and that has 100x upside potential, check out our report about this cheapest AI stock.
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