In this article, we will look at the 15 Best Cheap Stocks to Buy for 2026.
Investors might feel like they have been overwhelmed by the news over the past year. But the stock market keeps reaching for new peaks every trading week. On January 28, the S&P 500 briefly crossed 7000 points for the first time, and the index has rebounded nearly 40% since its April 2025 lows. Just a day earlier, on January 27, the broad market index had notched its fifth record close, according to CNBC.
The tech-heavy Nasdaq Composite has also seen a similar run, although the gains for 2026 have been modest. The star of the show so far this year, however, is the Russell 2000, which has surged nearly 7% year-to-date, as of January 29. An analysis shows that the index has outperformed large-cap peers for 14 consecutive trading sessions, its longest streak since 1996.
But this unrelenting rally has amplified concerns about stretched valuations. Expert observers cite the Shiller S&P 500 price-to-earnings ratio, which currently reads 41, its highest level since the dot-com bubble. The conventional trailing P/E ratio sits at 31.52, well above the historical average of 16.2. According to Savita Subramanian, Bank of America’s head of US equity strategy, “the S&P 500 is expensive, meaning risks to the index abound in 2026.” And she expects that the index will hit 7,100 by year-end 2026, which ranks among the lowest on the Street.
This reality explains why Goldman Sachs analysts predict that value stocks will remain in favor in the months ahead if the US economic momentum strengthens. According to the analysts, the value stocks, which are low-valuation shares typically with a forward P/E less than 15, have continued to outperform their higher-valuation equivalents at the start of the year. They noted that this indicator posted a 15% return in the last six months of 2025.
With that in mind, let’s take a look at several best cheap stocks to buy for 2026.
Our Methodology
To create this list, we used several screeners, including TradingView and Finviz, to identify US-listed stocks trading at forward P/E ratios between 3 and 15. We filtered for names with a positive upside potential of at least 20%.The stocks are ranked in ascending order based on hedge fund holdings 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).
Note: The forward P/E and upside potential data are as of January 31, 2026.
Best Cheap Stocks to Buy for 2026
15. HNI Corporation (NYSE:HNI)
Number of Hedge Fund Holders: 25
Forward P/E: 11.92
Stock Upside Potential: 58.46%
HNI Corporation (NYSE:HNI) is one of the best cheap stocks to buy for 2026. On January 16, Benchmark Co. lifted its price target for HNI Corporation (NYSE:HNI) to $75 per share from $60. The firm continued to assign the stock a Buy recommendation.
The revision came in the context of HNI Corp’s announcement in August 2025 regarding its planned purchase of Steelcase Inc., a transaction carrying an enterprise value of roughly $2.2 billion. The analyst’s assessment referenced management projections indicating the merger would yield annual cost synergies totaling approximately $120 million once integration is complete. Benchmark also incorporated guidance suggesting the transaction would add between $0.50 and $0.60 to HNI’s earnings per share by fiscal year 2027.
At the same time, Benchmark selected HNI as a top choice for 2026, pointing out that the stock is priced below its typical historical values. The firm stated that there are clearer prospects for profit growth in a market that seems to be bottoming out. Benchmark also observed that HNI’s shares have a price-to-earnings ratio of 13.35, and the company has consistently paid dividends over 55 years.
Independent of the analyst action, on January 8, HNI announced plans to shut down its manufacturing facility in Wayland, New York, by 2027. This move will affect about 135 jobs at the site. The facility has served as the production hub for Gunlocke, HNI’s wood furniture brand focused on workplace furnishings, since the company acquired the operation in 1989, though the plant itself dates back to 1902 when the W. H. Gunlocke Chair Company first opened its doors.
HNI stated that products currently made at the plant will continue to be produced elsewhere with no anticipated changes to the product lineup or quality standards. And the company estimated that annual cost savings from the consolidation will be about $7.5 million to $8 million once fully implemented.
HNI Corporation (NYSE:HNI) manufactures workplace furnishings and residential building products. Its workplace segment includes furniture systems, seating, storage, and architectural products sold to offices, institutions, and hospitality clients. The residential building segment produces gas, wood, and electric fireplaces, stoves, and outdoor fire pits distributed through dealers, retailers, and eCommerce platforms.
14. Sanofi SA (NASDAQ:SNY)
Number of Hedge Fund Holders: 32
Forward P/E: 9.02
Stock Upside Potential: 25.11%
Sanofi SA (NASDAQ:SNY) is one of the best cheap stocks to buy for 2026. On January 27, Citi Research initiated coverage of six large European pharmaceutical stocks, including Sanofi SA (NASDAQ:SNY), AstraZeneca, Roche, Novo Nordisk, GSK, and Novartis.
Citi assigned Sanofi a Neutral rating and an €85 price target, a move that positioned the company in the middle of the group. The bank’s analyst Graham Parry commented that pipeline setbacks have weakened the long-term growth outlook for Sanofi. In other words, Citi has concerns about Sanofi’s drug development progress. Parry also described 2026 as “catalyst-light” for Sanofi, and that he sees fewer near-term events or milestones that might drive the stock.
In discussing the company’s valuation, Citi stated that Sanofi has time to strengthen its pipeline organically and through acquisitions over the next five years. However, the analysts noted that the company’s current valuation, about 10 times expected 2026 earnings, largely reflects the setbacks. The firm added that they believe the market is unlikely to reward the stock with a much higher multiple without tangible evidence of pipeline improvement.
Meanwhile, on January 23, Sanofi reported that its experimental medicine amlitelimab showed positive results in Phase 3 clinical studies. The studies focused on moderate-to-severe atopic dermatitis (eczema) in people aged 12 years and older. The data come from two major global trials called SHORE and COAST 2, and follow earlier positive findings from the COAST 1 study. Across both studies, amlitelimab was generally well tolerated, and side effects were consistent with what Sanofi has seen before.
Sanofi SA (NASDAQ:SNY) is a global healthcare company engaged in the research, development, manufacturing, and marketing of pharmaceutical products. Its operations span specialty care, vaccines, and general medicines.
13. Energy Transfer LP (NYSE:ET)
Number of Hedge Fund Holders: 35
Forward P/E: 11.38
Stock Upside Potential: 20.61%
Energy Transfer LP (NYSE:ET) is one of the best cheap stocks to buy for 2026. On January 21, Goldman Sachs increased its price target for Energy Transfer LP (NYSE:ET) to $19.00 from $18.50 and kept a Neutral rating on the stock. The firm attributed the adjustment mainly to the upcoming USAC/J-W Power acquisition in the first quarter of 2026. The other key factor is minor tweaks to assumptions about re-contracting in natural gas liquids (NGLs) and crude oil segments, which led to a roughly 1% rise in longer-term estimates.
For Q4 2025, Goldman Sachs lowered its EBITDA forecast to $4.16 billion, down 1% from its prior estimate. The firm cited impacts from reduced commodity prices and weather-related slowdowns in NGL exports. This figure is 2% below the general consensus of $4.23 billion. And for the full year 2025, Goldman Sachs projected EBITDA of $15.96 billion, matching the company’s earlier indication that results would fall just short of its guided range of $16.1 billion to $16.5 billion. For 2026, the firm estimated EBITDA at $17.58 billion, or an adjusted $17.37 billion when excluding J-W Power and Hugh Brinson items as per management’s approach. Again, this projection aligns closely with Energy Transfer’s recent guidance of $17.3 billion to $17.7 billion.
The bank said it expects contributions from the PKI acquisition by Susser Holdings Corporation, Waha spread capture, and underlying gas volume growth. Nevertheless, it noted that these positive effects are likely to be partially offset by lower Midstream margin in the fourth quarter.
Energy Transfer LP (NYSE:ET) is a midstream energy company that owns and operates one of the largest portfolios of natural gas, crude oil, and NGL pipelines in the United States. Its assets include interstate and intrastate natural gas pipelines, storage facilities, fractionation plants, and crude oil terminals.
12. MetLife, Inc. (NYSE:MET)
Number of Hedge Fund Holders: 39
Forward P/E: 7.64
Stock Upside Potential: 21.95%
MetLife, Inc. (NYSE:MET) is one of the best cheap stocks to buy for 2026. On January 6, Evercore ISI lowered its rating on MetLife, Inc. (NYSE:MET) to “In Line” from Outperform, while cutting the price target to $97 from $108. The firm also removed MetLife from its Core Ideas List, replacing it with Aflac.
Evercore explained that this change was driven in part by the possibility of downside to consensus forward earnings. In other words, the analysts see MetLife’s earnings expectations weakening relative to what the market previously anticipated. The firm also pointed to valuation concerns, saying MetLife’s stock appeared relatively expensive compared with mid-cap peers, even though it was still cheaper than some larger competitors. Accordingly, Evercore reduced its own 2026 earnings estimate for MetLife by about 3.5%, and noted that its initial 2027 earnings estimate was roughly 4-5% below consensus expectations.
The analysts also raised concerns specifically about low new money spreads on public corporate bonds combined with MetLife’s somewhat higher risk commercial mortgage loan portfolio compared with peers. They called this combination a “double-edged sword” for the stock.
But despite the risks, Evercore acknowledged that MetLife has shown impressive growth in Asia recently, though this strength was weighed against other headwinds. The analysts also noted that risk transfer deals could serve as a potential catalyst for the stock.
MetLife, Inc. (NYSE:MET) provides insurance, annuities, employee benefits, and asset management services across the United States and international markets. Its operations include life, dental, disability, property, and casualty insurance, as well as retirement and savings products offered to individuals and institutions.
11. Keurig Dr Pepper Inc. (NASDAQ:KDP)
Number of Hedge Fund Holders: 58
Forward P/E: 12.61
Stock Upside Potential: 31.04%
Keurig Dr Pepper Inc. (NASDAQ:KDP) is one of the best cheap stocks to buy for 2026. On January 15, Keurig Dr Pepper Inc. (NASDAQ:KDP) officially launched an $18 billion all-cash takeover offer for JDE Peet’s, the Dutch coffee and tea giant. This deal proposes €31.85 per share in a transaction that would take the Amsterdam-listed company private.
The offer values JDE Peet’s at approximately €15.56 billion ($18.10 billion) and is a culmination of negotiations announced in August 2025. The tender offer period runs from January 16 through March 27, 2026. And closing is anticipated in the early second quarter of this year, of course, pending shareholder acceptance.
JDE Peet’s board has unanimously endorsed the transaction as being in the best interest of stakeholders. Likewise, shareholders controlling roughly 69% of outstanding shares, including major stakeholder Acorn Holdings and all board members, have already committed to tender their holdings. The acquisition has already cleared all required competition approvals and has received positive advice from Dutch and European Works Councils.
Upon completion, Keurig Dr Pepper intends to split into two separate publicly traded companies. One will be focused on North American refreshment beverages, including Dr Pepper sodas. The other, a newly created global coffee powerhouse and tentatively called Global Coffee Co., will run coffee operations to serve over 100 countries.
Keurig Dr Pepper Inc. (NASDAQ:KDP) is a beverage company that produces and distributes soft drinks, coffee, and specialty beverages across North America. Its portfolio includes brands such as Dr Pepper, 7UP, Snapple, and Green Mountain Coffee.
10. Allstate Corporation (NYSE:ALL)
Number of Hedge Fund Holders: 60
Forward P/E: 8.22
Stock Upside Potential: 23.65%
Allstate Corporation (NYSE:ALL) is one of the best cheap stocks to buy for 2026. The Allstate Corporation (NYSE: ALL) will hold its fourth-quarter 2025 earnings conference call and webcast on Thursday, February 5, 2026, at 9:00 a.m. ET.
On January 22, BMO Capital analyst Michael Zaremski raised the price target on Allstate Corporation (NYSE:ALL) to $249 from $244 and kept the Outperform rating on the shares unchanged. Zaremski attributed the higher valuation to lower estimated reinsurance costs following lighter catastrophe loss levels in the second half of 2025.
BMO’s move follows Allstate’s update on January 15 in which it announced estimated pre-tax catastrophe losses for Q4 2025 of $209 million. This was a huge decline from the $1.99 billion reported in Q2 2025. The company estimated the December 2025 catastrophe losses at $80 million, indicating a continued slowdown in the run-rate of severe weather events and natural disasters during the latter part of the year. BMO noted that this reduction in catastrophe losses directly impacts Allstate’s reinsurance expenses.
The updated $249 target equates to about 10.7 times BMO’s projected 2026 earnings per share for Allstate. This aligns with the company’s 17-year average forward price-to-earnings ratio, not counting its old life and annuity operations.
Separately, on January 14, Mizuho raised its price target on Allstate to $255 from $254, while maintaining an Outperform rating on the stock. Mizuho’s update came after the firm updated its financial models for the insurance sector. The analysts noted that the revised models focus on several key industry drivers, including pricing strategies, loss trends, and reserve levels.
Allstate Corporation (NYSE:ALL) provides property and casualty insurance products, including auto, home, and commercial coverage, as well as life insurance and retirement solutions across the United States. Its operations are supported by a broad distribution network of agents, brokers, and direct-to-consumer channels.
9. EOG Resources, Inc. (NYSE:EOG)
Number of Hedge Fund Holders: 61
Forward P/E: 10.54
Stock Upside Potential: 20.70%
EOG Resources, Inc. (NYSE:EOG) is one of the best cheap stocks to buy for 2026. On January 16, KeyBanc analyst Tim Rezvan downgraded EOG Resources, Inc. (NYSE:EOG) from Overweight to Sector Weight. Rezvan cited concerns about deteriorating well productivity in EOG’s core Texas operations. The analyst pointed to clear signs of degradation in both the Eagle Ford and Delaware Basin assets, which represent EOG’s primary production regions and legacy workhorse properties.
And while acknowledging that initial production rates from new extra-large laterals can show variability during their first year, Rezvan concluded that these productivity trends warranted a more cautious stance on the stock compared to previous expectations. This, in part, explains why the analyst maintained his price target on EOG shares at $138.
Despite the downgrade, KeyBanc expressed continued optimism about EOG’s oily Utica asset. The analyst stated that they remain bullish on the asset, but are concerned by productivity changes from the legacy workhorse assets in Texas.
Rezvan also took the chance to point out that he has adopted a more selective view of the energy sector as it entered 2026. In other words, he has concerns about current low oil prices and heightened volatility in natural gas markets.
EOG Resources, Inc. (NYSE:EOG) is an independent oil and gas company that explores, develops, produces, and markets crude oil, natural gas, and natural gas liquids. Its operations are concentrated in major US shale basins.
8. Qualcomm Inc. (NASDAQ:QCOM)
Number of Hedge Fund Holders: 63
Forward P/E: 12.63
Stock Upside Potential: 26.06%
Qualcomm Inc. (NASDAQ:QCOM) is one of the best cheap stocks to buy for 2026. On January 26, Mizuho trimmed its price target on Qualcomm Inc. (NASDAQ:QCOM) to $160 from $175 and kept a Neutral rating on the shares. The investment bank tied the update directly to a weaker outlook for global handset demand and related industry pressures.
Mizuho stated that it expects global handset shipments in calendar year 2026 to decline by about 4% compared to 2025. And there is a downside risk of more than 5% because, particularly in H2 2026, higher memory prices and supply shortages are expected to pressure production. The analysts highlighted that Chinese OEMs are likely to cut handset output by about 10%. Already, Chinese OEM handset inventory shrank to about two to four weeks from 13 to 17 weeks a year earlier. As such, many Android makers could face sharper pressure as memory prices rise through 2026.
Besides the weaker outlook, Mizuho sees Qualcomm facing tougher competition from MediaTek, especially concerning high-end chips. There is also the issue of content cuts by Apple and Huawei.
These headwinds together convinced Mizuho to project that Qualcomm’s earnings will decline about 3% year-on-year. And that the company will see only low single-digit growth over fiscal 2026 to 2028.
Qualcomm Inc. (NASDAQ:QCOM) designs and supplies semiconductors, software, and wireless technology solutions. It focuses on mobile connectivity, 5G infrastructure, and Internet of Things applications. Its operations include licensing wireless technologies and producing chipsets used in smartphones, automotive systems, and connected devices worldwide.
7. Carnival Corporation & plc (NYSE:CCL)
Number of Hedge Fund Holders: 69
Forward P/E: 11.56
Stock Upside Potential: 32.31%
Carnival Corporation & plc (NYSE:CCL) is one of the best cheap stocks to buy for 2026. On January 13, TD Cowen raised its price target for Carnival Corporation & plc (NYSE:CCL) from $35 to $38 while maintaining a Buy rating on the stock. In explaining its view, TD Cowen acknowledged near-term challenges in the cruise market, noting that Caribbean yield pressures will make a tough earnings season for Royal and Norwegian. This refers to pricing pressures in the Caribbean cruise segment affecting industry peers Royal Caribbean and Norwegian Cruise Line.
And despite these short-term headwinds, TD Cowen emphasized that fundamental demand for cruises remains strong. Also, capacity trends look constructive through fiscal year 2029, the firm added.
Meanwhile, in December, Carnival Corporation & plc released the annual report for the fiscal year ended November 30, 2025, in which it reported record annual operating income of $4.5 billion. This figure is about 25% higher than FY2024.
Management detailed that strong demand and higher passenger pricing enabled their full-year revenues to also touch a record peak of $26.6 billion. Net income for the year came in at $2.8 billion, and adjusted net income reached about $3.1 billion. Both figures are new highs. Another record figure was the adjusted EBITDA, which touched $7.2 billion, more than $1 billion above 2024 levels. And because of these blowout figures, Carnival’s board reinstated a quarterly dividend, declaring an initial payment of $0.15 per share payable February 27, 2026. Also, management raised its earnings outlook well above prior expectations. They project adjusted net income of approximately $3.5 billion for the coming year, and expect return on invested capital to exceed 13.5% and approach 20-year highs.
Carnival Corporation & plc (NYSE:CCL) operates cruise lines under brands including Carnival Cruise Line, Princess Cruises, Holland America Line, and Costa Cruises. Its fleet provides vacation packages that combine lodging, dining, entertainment, and global destinations.
6. Delta Air Lines, Inc. (NYSE:DAL)
Number of Hedge Fund Holders: 70
Forward P/E: 9.06
Stock Upside Potential: 29.12%
Delta Air Lines, Inc. (NYSE:DAL) is one of the best cheap stocks to buy for 2026. On January 27, Delta Air Lines, Inc. (NYSE:DAL) announced plans to purchase 31 additional widebody aircraft from Airbus. The new acquisitions will be 16 A330-900neo jets and 15 A350-900s, and deliveries will commence in 2029.
The transaction comprises both a fresh incremental commitment and the conversion of 10 existing options into firm orders. Also, there will be an addition of 20 new options for potential future widebody acquisitions. And once these aircraft arrive, Delta’s count of A330-900s will reach 55 units, and the A350 collection will expand to 79.
Two weeks before this purchase, Delta placed a milestone order for 30 Boeing 787-10 Dreamliners. These will be the carrier’s first direct widebody purchase from Boeing since 2008; that is when they arrive starting in 2031.
In a different update, on January 14, Seaport Research lowered its price target on Delta stock to $88 from $89, while maintaining a Buy rating due to the current macro volatility in the market.
And in related analyst moves, UBS lowered its price target on Delta from $90 to $87 and kept a Buy rating. On the contrary, Argus increased its price target on the stock to $80 from $70 with a Buy rating.
Delta Air Lines, Inc. (NYSE:DAL) provides scheduled air transportation for passengers and cargo across domestic and international routes. It operates a global network through hubs in the United States and partnerships with international carriers. Its services include passenger flights, cargo logistics, and maintenance operations.
5. CVS Health Corporation (NYSE:CVS)
Number of Hedge Fund Holders: 78
Forward P/E: 10.05
Stock Upside Potential: 28.33%
CVS Health Corporation (NYSE:CVS) is one of the best cheap stocks to buy for 2026. On January 27, BofA Securities cut its price target on CVS Health Corporation (NYSE:CVS) stock to $95 from $100 while keeping a Buy rating. This cut, stated BofA, was prompted by a recent proposal from the Centers for Medicare & Medicaid Services (CMS) that fell short of market hopes.
The CMS proposed new policies for the calendar year 2027 in an advance notice that outlined a net all-in rate of 2.54%. This figure is below what the market had in mind, at 4-6%. The notice also contains a new CMS-HCC model for calculating risk scores, which is expected to reduce payments by about 1.53% in 2027. These changes aim to stop certain billing practices by excluding diagnosis information from unlinked Chart Review Records, or CRRs, in risk score calculations starting in the calendar year 2027.
Other analysts weighed in with mixed but mostly optimistic views. For instance, Bernstein lifted its price target to $87 while holding a Market Perform rating. The firm cited growth opportunities via Aetna but noting ongoing issues in the pharmacy benefit manager space.
Separately, on January 6, the CVS Board of Directors approved a quarterly dividend of $0.665 per share on the company’s common stock. The payment will be honored on February 2 this year to shareholders who are on the company’s books as of January 22.
CVS Health Corporation (NYSE:CVS) operates as a diversified healthcare company through its retail pharmacies, pharmacy benefit management services, and health insurance offerings under Aetna. Its operations include prescription drug distribution, walk-in medical clinics, and insurance plans.
4. AT&T Inc. (NYSE:T)
Number of Hedge Fund Holders: 84
Forward P/E: 10.41
Stock Upside Potential: 21.52%
AT&T Inc. (NYSE:T) is one of the best cheap stocks to buy for 2026. UBS reiterated its Buy rating on AT&T Inc. (NYSE:T) with a $31 price target on January 29, citing solid Q4 results and guidance that points to accelerating growth. The firm expects AT&T’s industry-leading fiber and convergence footprint to drive profit expansion and rising free cash flow, while noting that concerns over wireless competition are overstated and already reflected in the stock.
On January 28, AT&T Inc. (NYSE:T) reported Q4 2025 adjusted earnings of $0.52 per share, surpassing analyst estimates of $0.46. Management credited the positive surprise to over $1 billion in cost savings achieved during the year alongside growth in the company’s convergence strategy of bundling fiber and wireless services.
The telecom provider’s quarterly revenues reached $33.5 billion. This is roughly 3.6% ahead of the prior year and above Wall Street expectations of approximately $32.9 billion. According to management, the revenue growth came on the back of the company’s eighth consecutive year of adding more than one million fiber subscribers and fifth straight year of securing over 1.5 million postpaid phone additions. The quarter’s adjusted EBITDA climbed more than 4% year-over-year and margins expanded by 20 basis points, which management attributed to service revenue growth in 5G, fiber and fixed wireless offerings. Disciplined cost management across the organization also played a huge role here, stated management.
And for the full fiscal year, adjusted earnings reached $2.12 per share, nearly 9% higher than 2024 and finishing above the company’s initial guidance. At the same time, free cash flow totaled $16.6 billion, landing near the upper end of management’s target range. This was despite $1.1 billion in cash taxes and increased pension contributions that partially offset operational cash generation.
Buoyed by the performance, management projected adjusted earnings between $2.25 and $2.35 per share for 2026 and free cash flow exceeding $18 billion. The guidance incorporates expectations that advanced home internet revenues will grow organically by more than 20% annually through 2028.
AT&T Inc. (NYSE:T) provides telecommunications, media, and technology services. This includes wireless and wireline communications, broadband, and pay-TV offerings across the United States.
3. PayPal Holdings, Inc. (NASDAQ:PYPL)
Number of Hedge Fund Holders: 86
Forward P/E: 9.59
Stock Upside Potential: 20.19%
PayPal Holdings, Inc. (NASDAQ:PYPL) is one of the best cheap stocks to buy for 2026. On January 28, Rothschild Redburn analyst Dominic Ball downgraded PayPal Holdings, Inc. (NASDAQ:PYPL) from Neutral to Sell and slashed the price target from $70 to $50. Ball cited the increasing competitive advantage of traditional card networks as a primary reason for the pessimistic shift toward the digital payments giant.
Ball specifically highlighted that the marginal consumer is choosing alternative payment methods more often than in the past. He noted that rivals such as Apple Pay, Google Pay, Shopify’s Shop Pay, and Stripe’s Link are winning incremental users away from PayPal’s platform. Also, the analyst pointed out that the e-commerce world is going “agentic” and that in this new landscape, traditional card networks have an edge through stronger pricing power and demand for cyber and risk services.
Later that day, on January 28, Morgan Stanley lowered its price target on PayPal to $50 from $51 and kept an Underweight rating on the stock. The firm cited slower growth in the company’s branded checkout segment. It explained that it trimmed expectations because it reduced its 2026 branded checkout growth forecast to 3.3% from 3.9%.
Morgan Stanley pointed out that PayPal’s progress on upgrading checkout integrations has been slow. The bank noted that only 25% of merchants had moved to the new checkout experience in about 15 months, and of those, only half are using the most optimized integration.
PayPal Holdings, Inc. (NASDAQ:PYPL) operates a digital payments platform that enables consumers and merchants to send, receive, and manage transactions online and through mobile devices. Its services include PayPal, Venmo, and Braintree.
2. Adobe Inc. (NASDAQ:ADBE)
Number of Hedge Fund Holders: 88
Forward P/E: 12.63
Stock Upside Potential: 36.77%
Adobe Inc. (NASDAQ:ADBE) is one of the best cheap stocks to buy for 2026. On January 27, Adobe Inc.’s (NASDAQ:ADBE) board-level Executive Compensation Committee approved three linked initiatives governing how senior leaders will be paid over the coming years. One was a three-year Performance Share Program rewarding stock performance and sales growth, and the other was an annual cash bonus plan tied to revenue and profit targets. The last initiative was a new policy capping severance payments, and all are effective for fiscal year 2026.
The 2026 Performance Share Program establishes a three-year measurement cycle running through 2028. It determines equity payouts based equally on two metrics: how Adobe’s shareholder returns stack up against the NASDAQ-100 index, and whether the company hits predetermined annualized recurring revenue (ARR) growth targets labeled as “Net New Sales.”
For annual cash incentives, the 2026 Executive Annual Incentive Plan requires the company to reach at least 95 percent of its stated revenue and earnings-per-share targets before any bonuses are activated. The ceiling is set at 155% of an executive’s target award amount. And the new severance policy restricts cash termination payments to 2.99 times an executive’s base salary plus target annual bonus for any new employment agreements or amendments entered into after January 26, 2026. This is unless shareholders specifically ratify more generous terms.
In a different update, on January 12, Goldman Sachs downgraded Adobe’s stock rating from Buy to Sell and set a price target of $290.00. This marks the bank’s first coverage of the company under its new stance. The new Sell rating and target were based in part on Goldman’s valuation methodology, which applies a 15× price-to-earnings multiple to Adobe’s forward earnings estimates.
Adobe Inc. (NASDAQ:ADBE) develops software products and services for digital media creation, marketing, and document management. Its portfolio includes Photoshop, Illustrator, Premiere Pro, Acrobat, and the Adobe Experience Cloud.
1. Capital One Financial Corp. (NYSE:COF)
Number of Hedge Fund Holders: 129
Forward P/E: 10.36
Stock Upside Potential: 29.11%
Capital One Financial Corp. (NYSE:COF) is one of the best cheap stocks to buy for 2026. On January 27, Evercore ISI analyst John Pancari lowered the price target on Capital One Financial Corp. (NYSE:COF) to $265 from $290 but kept an Outperform rating on the stock. Pancari acted just days after Capital One announced on January 22 that it had entered into a definitive agreement to acquire fintech company Brex for approximately $5.15 billion in a combination of stock and cash.
According to Pancari, Evercore’s updated target reflects the firm’s view that Capital One’s expected earnings growth has softened. Evercore reduced its 2026 EPS estimate to $18.87 from $19.26 and its 2027 EPS estimate to $22.83 from $23.32. These revisions assume the Brex deal closes in the third quarter of 2026, said Pancari. He and the team at Evercore estimated the acquisition will produce approximately 5% tangible book value dilution and 1% core EPS dilution related to share issuance.
The analyst noted that near-term expenses are likely to rise as Brex is integrated into Capital One’s payments platform and as the company continues investments in the Discover Financial Services network. Pancari projected a total efficiency ratio of about 51.7% in 2026 and about 51.2% in 2027, compared with roughly 50% in the latter half of 2025.
But despite these challenges, Pancari said he is encouraged by management’s commitment to prudent capital management and consistent earnings power following Capital One’s integration of Discover Financial Services. And, he views the Brex acquisition as a strategic move that could help Capital One compete more effectively with American Express in the payments space.
Capital One Financial Corp. (NYSE:COF) provides consumer and commercial banking services. This includes credit cards, auto loans, savings accounts, and small business lending, with operations across the United States.
While we acknowledge the potential of COF 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 COF and that has 100x upside potential, check out our report about this cheapest AI stock.
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