In this article, we will take a look at the 7 Penny Stocks with Low Forward P/E Ratios.
Penny stocks are stocks that trade at low prices, typically below $5, and are generally considered risky as compared to their larger counterparts. While lower-priced stocks allow investors to gain exposure at a lower upfront cost, undervalued penny stocks with a low forward price-to-earnings (P/E) ratio present a compelling opportunity.
2025 was a year influenced by shifting interest rates, persistent inflation, and unsettled tariffs. Investors are monitoring these factors for earnings in 2026. Wall Street expects 2026 earnings growth to be fuelled by AI-driven infrastructure, while the oil market, precious metals, and healthcare sectors will also have an impact. Analysts are projecting another year of double-digit growth, with the S&P 500 expected to grow by around 15%. This exceeds the long-term average of 8%-9%. Hussein Malik, Head of Global Research, JPMorgan, said:
”We expect the global economy to remain resilient in 2026, with AI investment continuing to drive market dynamics and support growth.”
JPMorgan Global Research remains positive on global equities for 2026, projecting double-digit gains across both developed and emerging markets. The bullish outlook is based on strong earnings growth, lower rates, declining policy headwinds, and the expansion of AI. Dubravko Lakos-Bujas from JPMorgan stated:
”The AI-driven supercycle is fueling record capex and rapid earnings expansion. This momentum is spreading geographically and across a diverse list of industries, from technology and utilities to banks, healthcare and logistics, creating winners and losers in the process.”
On the other hand, investors are betting on Treasury yields and a steeper yield curve, as the new Federal Reserve chair is expected to pursue interest rate cuts. The incoming Fed Chair, Kevin Warsh, is expected to focus on the central bank’s balance sheet, with his preference for a materially smaller Fed balance sheet.
This development could lead to a withdrawal of meaningful government demand for Treasuries. Eric Kuby, chief investment officer at North Star Investment Management Corp., said:
”The main outcome of shrinking the balance sheet would be to have a yield curve that is more normally positively sloped, as it was historically before all the intervention following the financial crisis.”
While some optimists expect another positive year for the market, some analysts have reservations. Michael Kantrowitz, Chief Investment Strategist at Piper Sandler, said it is tricky because there has been significant uncertainty over the last five years, particularly this year. Speaking to Bloomberg, Kantrowitz said:
”When there’s a lot of uncertainty, investors are very myopic and reactive to different data points and it doesn’t take much to change the opinion and consensus.”
Therefore, valuations are always important from an investment perspective. Getting value for your investment should be the main goal for making progress in the long run. The AI rally, which is driving market surges, remains a major concern for most sectors. Considering the historic dot-com crash, investing in penny stocks trading at a discounted earnings multiple relative to the market can be a great option to explore.
With that, let’s take a look at the 7 Penny Stocks with Low Forward P/E Ratios.
Our Methodology
To create a list of 7 penny stocks with low forward P/E ratios, we identified companies trading around $5 with forward P/E ratios between 4 and 15. We selected the top 7 penny stocks with either 3 analysts covering them or 15 hedge funds holding stakes in them. Finally, we ranked the 7 penny stocks by the number of hedge funds holding stakes in them. The hedge fund sentiment data for each stock were sourced from Insider Monkey’s database 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: All the data is as of market close on February 3, 2026.
7. Cosan S.A. (NYSE:CSAN)
Price Per Share: $4.60
Number of Hedge Fund Holders: 9
Cosan S.A. (NYSE:CSAN) is among the penny stocks with low forward P/E ratios to look for.
On February 2, Cosan S.A. (NYSE:CSAN) reported through a 6-K filing that its wholly-owned subsidiary, Cosan Luxembourg S.A., is moving ahead with liability management with full redemption of 2030 and 2031 bonds.
Cosan Luxembourg is completing its redemption of the senior notes due June 2030 and January 2031, at an aggregate principal amount of approximately $269.33 million and $300 million, respectively. With this, the company completes its debt repayment of nearly R$6.2 billion to date. The company will continue to provide updates on next steps. Cosan remains focused on minimizing its debt and financial costs, ultimately improving its capital structure. Cosan stock currently trades at a forward P/E of 6.66.
In other news, on January 6, Reuters reported that Cosan S.A. (NYSE:CSAN) sold its stake in Vale S.A. as part of its debt-reduction efforts. The company offloaded 173 million shares it owned in Vale, a multinational metals and mining firm. The company said that the decision was “based solely on the goal of optimizing its capital structure.”
Cosan S.A. (NYSE:CSAN) is engaged in the fuel distribution business and in the production of bioethanol, sugar, and energy. The company operates through five segments: Raízen, Compass, Moove, Rumo, and Radar.
6. LG Display Co., Ltd. (NYSE:LPL)
Price Per Share: $3.87
Number of Hedge Fund Holders: 11
LG Display Co., Ltd. (NYSE:LPL) is among the penny stocks with low forward P/E ratios to look for.
On January 28, LG Display Co., Ltd. (NYSE:LPL) reported its fourth quarter 2025 results. The company posted mixed results, with Q4 revenue of KRW 7.2008 trillion or $5.03 billion, surpassing estimates by $193.24 million. However, despite improved sales, LG reported losses of nearly KRW 351 billion, primarily due to foreign currency translation losses.
After reducing losses by almost KRW 2 trillion in 2024 compared to 2023, LG further added to its performance improvement of KRW 1 trillion in 2025, recording its first annual turnaround in four years. This shows the company’s continuous efforts to expand its OLED-centric business model. LG’s focus is to drive cost structure innovation and enhance operational efficiency. In Q4, the OLED business added 5% to the total revenue. Panel shipment for TV and notebook PC panels also soared, with TV panels accounting for 19% of annual revenues in 2025. The management in its Q4 release stated:
”In 2026, LG Display plans to leverage AX (AI transformation) to continuously enhance its technological and cost competitiveness, while further strengthening management and operational efficiency to build a stable and sustainable profit structure.”
Over the past one year, through February 3, LG Display Co., Ltd. (NYSE:LPL) shares have gained over 19.50%. 53% out of 15 analysts covering the stock rate LPL as a Buy, and 40% of them rate it as a Hold. LPL has a median price target of approximately $5.12, implying over 32% upside. LG Display’s stock is trading at a P/E ratio of 4.91.
LG Display Co., Ltd. (NYSE:LPL) manufactures and sells thin-film transistor liquid crystal display (TFT-LCD) and organic light-emitting diode (OLED) technology-based display panels globally.
