In this article, we will be taking a look at the 12 Most Profitable Cheap Stocks to Buy Right Now.
On July 7, Reuters reported that the S&P 500 declined as shares of chipmakers fell. The drop came as investors became more doubtful about whether the strong AI-driven rally on Wall Street will continue.
This marks the latest period of volatility for memory chipmakers and other AI-related stocks. Investors are concerned that the sharp gains linked to the buildout of AI data centers have pushed these stocks to very high valuations.
Reuters also reported that Chinese startup DeepSeek is developing its own AI chip, which added to concerns regarding chipmakers and their high valuations.
Zachary Hill, head of portfolio management at Horizon Investments in Charlotte, North Carolina, said that “the story of today is the story of the last few weeks, and that’s rotation after the blistering run in the AI buildout, semis and memory. Expectations have gotten to be almost impossible to beat for these companies.”
With this background in mind, let’s take a look at the 12 most profitable cheap stocks to buy right now.
Our Methodology
To compile our list of the 12 most profitable cheap stocks to buy right now, we looked for cheap stocks trading at under 15 times their forward earnings as of July 6, 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 12 most profitable stocks that are favored by institutional investors. Data for the hedge fund sentiment surrounding each stock was taken from Insider Monkey’s Q1 2026 database of 1022 elite hedge funds. Finally, the 12 most profitable cheap stocks to buy right now were ranked in ascending order based on the number of hedge funds holding stakes in them as of Q1 2026.
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. Insider Monkey’s quarterly newsletter strategy selects 14 small-cap and large-cap stocks every quarter and has returned 599.2% since May 2014, beating its benchmark by 372 percentage points (see more details here).
12 Most Profitable Cheap Stocks to Buy Right Now
12. The PNC Financial Services Group, Inc. (NYSE:PNC)
Forward P/E: 13.46
Profit Margin: 31.31%
Net Income Available to Common (TTM): $6.85 Billion
Number of Hedge Fund Holders: 63
The PNC Financial Services Group, Inc. (NYSE:PNC) is one of the most profitable cheap stocks to buy right now. On June 25, UBS reiterated its Buy rating on The PNC Financial Services Group, Inc. (NYSE:PNC) with a price target of $263 on the stock.
This update came after meetings at the company’s headquarters with the senior leadership team. UBS analyst Erika Najarian met with The PNC Financial Services Group, Inc.’s (NYSE:PNC) CEO Bill Demchak, President Mark Wiedman, CFO Rob Reilly and other senior executives from the company’s major business lines. UBS said it had not been this impressed after meeting with a management team since its meeting with Morgan Stanley in June 2025.
The research firm believes that The PNC Financial Services Group, Inc. (NYSE:PNC) should be seen as an emerging national bank that is valued like a regional bank. UBS added that if the company reaches a return on tangible common equity of about 20%, its valuation looks attractive compared with global systemically important banks.
UBS also believes The PNC Financial Services Group, Inc. (NYSE:PNC) has room for both earnings per share upgrades and multiple expansion. In addition, the firm sees strong backing for the stock from long-term investors.
The PNC Financial Services Group, Inc. (NYSE:PNC) is one of the largest diversified financial services institutions in the US. It offers retail and corporate banking, lending products, wealth management, asset management, and specialized services for corporations and government entities.
11. PDD Holdings Inc. (NASDAQ:PDD)
Forward P/E: 7.35
Profit Margin: 21.62%
Net Income Available to Common (TTM): $95.65 Billion
Number of Hedge Fund Holders: 66
PDD Holdings Inc. (NASDAQ:PDD) is one of the most profitable cheap stocks to buy right now. On June 27, Citi said that China’s major internet companies have become unpopular with investors this year as money has shifted toward AI chipmakers. However, the bank believes the recent decline in these stocks has gone too far and this has now created an attractive buying opportunity.
Citi named PDD Holdings Inc. (NASDAQ:PDD) as one of its top picks. The bank said many of these internet companies are trading near their lowest valuations in years, even though they continue to generate strong cash flows. According to the brokerage, the recent weakness in the share prices does not reflect the underlying strength of their businesses.
Additionally, Citi said that these stocks would still appear cheap even if profits were lower than expected over the next year. This indicates that much of the negative news has already been priced into their shares.
Another reason for Citi’s optimism is the strong financial position of these companies. PDD Holdings Inc. (NASDAQ:PDD) alone holds about $63 billion in cash, cash equivalents, and short-term investments. While the AI hardware sector could continue attracting investors in the near term, Citi expects investors to eventually return to profitable internet companies with strong core businesses, healthy cash generation, and expanding AI capabilities.
PDD Holdings Inc. (NASDAQ:PDD), formerly Pinduoduo Inc., is a multinational commerce group best known for its e-commerce platforms, Pinduoduo and Temu.
Hedge Fund Resource Center