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.
5. Ultrapar Participações S.A. (NYSE:UGP)
Price Per Share: $4.96
Number of Hedge Fund Holders: 17
Ultrapar Participações S.A. (NYSE:UGP) is among the penny stocks with low forward P/E ratios to look for.
On January 27, Ultrapar Participações reported in an SEC filing that its shareholders, Squadra Investimentos – Gestão de Recursos LTDA and its affiliate Squadra Investments – Gestão de Recursos LTDA, have reduced their aggregate stake in the company to 4.95%. Squadra now holds approximately 55.21 million shares of UGP. Squadra has currently loaned out almost 5.42 million of these shares. According to the filing, Squadra does not intend to change Ultrapar’s control composition or administrative structure.
In other news, on December 10, 2025, Ultrapar’s board approved the company’s Strategic Plan for 2026-2035 and the budget for 2026. The new plan endorses a Corporate Policy update, focusing on AI use, indicating Ultrapar’s commitment to integrating advanced technologies into its operations. The company expects to improve its operational efficiency and strategic positioning in the market.
In 2025, the company made significant investments to expand in Brazil’s energy and infrastructure sectors. The company allocated R$2.542 billion, prioritizing expansion, with 60% of the capital allocated to its core businesses. The 2025 plan took investors into confidence, with Ultrapar Participações S.A. shares returning more than 69% to its shareholders in the last one year, through February 3. In January alone, the stock moved over 27.50%, reflecting positive investor sentiment following the board’s approval of the 2026 plan. With a forward P/E of 11.03, UGP trades at a discount of over 40% to its peers.
Ultrapar Participações S.A. (NYSE:UGP) operates in the energy, mobility, and infrastructure sectors in Brazil. The company focuses on distributing liquefied petroleum gas to residential, commercial, and industrial customers.
4. Clarivate Plc (NYSE:CLVT)
Price Per Share: $2.11
Number of Hedge Fund Holders: 25
Clarivate Plc (NYSE:CLVT) is among the penny stocks with low forward P/E ratios to look for.
On February 2, Clarivate Plc (NYSE:CLVT) announced that its subsidiary, Camelot Finance S.A., has redeemed the remaining aggregate principal amount of its 4.50% senior secured notes due 2026.
Camelot paid the remaining $100 million aggregate principal on its senior secured notes issued on October 31, 2019. The company redeemed the 2026 Notes on January 30, 2026, at a cash redemption price equal to 100% of the remaining principal amount, including accrued and unpaid interest through the Redemption Date.
Camelot’s Senior Note redemption is part of Clarivate’s ongoing effort to simplify its capital structure and minimize debt, thereby improving financial flexibility. The company funded the redemption with cash on hand. Jonathan Collins, Executive Vice President and Chief Financial Officer, said:
”We remain focused on strengthening our balance sheet, enhancing financial flexibility, and driving long‑term value creation for our shareholders.”
Clarivate Plc (NYSE:CLVT) also completed share repurchases valued at nearly $75 million during Q4 FY2025. In FY2025, the company repurchased approximately 56 million CLVT shares for $225 million.
CLVT has a consensus median price target of $4, implying an upside of over 48% as of February 3. Clarivate Plc has a forward PE ratio of 4.12.
Clarivate Plc (NYSE:CLVT) is an information services provider offering scientific and academic research, connected data, solutions, and expertise. The company operates via three segments, including Academia & Government, Life Sciences & Healthcare, and Intellectual Property.
3. Coty Inc. (NYSE:COTY)
Price Per Share: $3.16
Number of Hedge Fund Holders: 30
Coty Inc. (NYSE:COTY) is among the penny stocks with low forward P/E ratios to look for.
On February 2, Coty Inc. (NYSE:COTY) announced its partnership with OpenAI to build on the AI firm’s fast-growing AI network. OpenAI will assist Coty in scaling the use of AI tools across its global organizational system.
Coty employees will be given access to OpenAI’s most advanced models with enterprise-grade security and privacy. This will assist them with daily work and improve cross-functional collaboration. In the first phase, Coty employees will gain access to secure, enterprise-grade AI tools. They will have the option to scale, considering the company’s evolving needs. Jerome Auvinet, Coty Chief Information, Digital Innovation & Business Services Officer, said:
”This collaboration enables Coty teams to securely use OpenAI’s leading, enterprise-grade AI capabilities in line with Coty’s expectations for privacy, quality, and performance. It helps our teams work more efficiently and focus on higher-value contributions.”
OpenAI will offer various techniques and training options, such as live training, hands-on workshops, and leadership engagement. Coty’s goal is to adapt the culture where AI naturally supports the company’s think tank. This will further lead to strengthening Coty’s talent, sharpening execution, and building a future‑ready workforce.
In other news on February 2, TheFly reported that Canaccord Genuity analyst Susan Anderson lowered the price target on Coty Inc. (NYSE:COTY) from $4 to $3.59, maintaining a Hold rating on the stock.
Anderson updated her model ahead of the company’s second-quarter fiscal year 2026 earnings. The analyst believes there is a lot of uncertainty around Coty’s future strategy with the pending loss of the Gucci license, new interim CEO, and potential divestitures. COTY is currently trading at a forward price-to-earnings ratio of 7.07.
Coty Inc. (NYSE:COTY), along with its subsidiaries, manufactures, markets, and distributes branded beauty products globally. The company operates two segments: the Prestige and Consumer Beauty.
2. Newell Brands Inc. (NASDAQ:NWL)
Price Per Share: $4.40
Number of Hedge Fund Holders: 31
Newell Brands Inc. (NASDAQ:NWL) is among the penny stocks with low forward P/E ratios to look for.
On January 25, TheFly reported that Canaccord Genuity analyst Brian McNamara lifted the price target on Newell Brands Inc. (NASDAQ:NWL) from $7 to $8, keeping his Buy rating on the stock.
McNamara increased the price target as the company announced the relaunch of its Chesapeake Bay Fragrance line on January 22. The company highlighted that the relaunch brings a refreshed identity, which includes an expanded home fragrance line of candles and reed diffusers.
The analyst believes investors are satisfied with the progress made in the turnaround. McNamara was amazed by the significant improvement in fourth-quarter 2025 channel data, especially for Sharpie, Graco, and Rubbermaid, even though they accounted for less than a third of overall sales.
Despite a 54% drop in stock value over the last one year, through February 3, the analyst expects the turnaround to be bearing fruit and projects 2026 to be Newell’s first year of net distribution gains since the unfortunate Jarden acquisition almost a decade ago.
Since the relaunch announcement, Newell Brands Inc. shares surged by more than 16% in January 2026. NWL currently trades at a forward P/E of 6.64.
Newell Brands Inc. (NASDAQ:NWL) is focused on the design, manufacturing, sourcing, and distribution of consumer and commercial products. Newell operates in three segments: Home and Commercial Solutions, Learning and Development, and Outdoor and Recreation.
1. B2Gold Corp. (NYSE:BTG)
Price Per Share: $5
Number of Hedge Fund Holders: 37
B2Gold Corp. (NYSE:BTG) is among the penny stocks with low forward P/E ratios to look for.
Over the past one year, through February 3, B2Gold Corp. (NYSE:BTG) shares have returned a remarkable 107.50%. Year-to-date, BTG shares have soared over 10%, despite Gold experiencing a record dip of 9.5% in a single day on Friday. Silver leaped downward to 30%, recording its worst day in history.
On January 26, TheFly reported that Scotiabank lifted the price target on B2Gold Corp. (NYSE:BTG) from C$8 to $C10, or $5.91 to $7.39. Ovais Habib from Scotiabank keeps a Sector Perform rating on the stock. BTG trades at 6.51x its forward earnings.
In another analyst price update on January 14, Raymond James analyst Judith Elliott raised B2Gold’s price target from $6 to $6.50 while maintaining her Outperform rating. Elliott remains bullish on B2Gold following an updated target on the mining group, indicating new commodity price forecasts for the precious and base metals complex. The analyst has raised gold and silver price estimates amid continued economic and political uncertainty.
B2Gold Corp. (NYSE:BTG) is a Canadian gold producer. The company owns 100% stake in the Gramalote gold project in Colombia, along with operations in the Fekola Mine in Mali, the Masbate Mine in the Philippines, and the Otjikoto Mine in Namibia.
While we acknowledge the potential of BTG 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 BTG and that has 100x upside potential, check out our report about this cheapest AI stock.
READ NEXT: 10 Best Small-Cap Biotech Stocks to Buy According to Analysts and 12 Best Commodity Stocks to Buy Right Now.
Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email below.
