Periods of high market volatility can make cheap stocks attractive because sharp price swings may undervalue fundamentally strong growth companies in the short run. This allows selective long-term investors to buy them at a discount and benefit when stability returns and prices recover.  On April 17, AB’s Jim Tierney and Charles Schwab’s Kathy Jones appeared together on CNBC’s ‘Power Lunch’ to discuss how long-term investors should move in the current market. Kathy Jones recommended neglecting the current marked noise and emphasized the importance of sticking to fundamental investment principles during such uncertainty. She advised investors to remain diversified, while keeping in mind their personal risk tolerance and capacity. She says that the current environment is one of considerable uncertainty and volatility, making a conservative, credit-quality-focused fixed income portfolio suitable. Jones thinks that long-term investors seeking income, capital preservation, and diversification from stocks should focus on higher credit quality bonds with a duration of about 5 to 7 years. She believes that this duration can balance earning a fair amount of interest income while minimizing credit risk, volatility, and interest rate risk.

Given the current market uncertainty, Jim Tierney encouraged equity investors to seek and be selective about opportunities available to them right now. He’s optimistic that attractive investment opportunities still exist despite the challenging environment. Tierney also addressed whether the recent market rebound should prompt investors to sell. He argued that for long-term investors, slightly lower prices amid a market that has risen about 90% over 5 years present a better entry point. He cautioned against expecting annual gains of 20% every year, noting that such consistently high returns are unrealistic. He highlighted the potential for companies capable of double-digit growth over the next 5 years to perform well despite tariff uncertainties. He advised focusing on firms that manufacture locally in different countries, so that tariff risks can be avoided. He even thinks that the companies with pricing power would be better off if tariffs were implemented in some form.

In this environment, careful stock selection becomes essential. With that acknowledged, we’re here with a list of the 10 cheap hot stocks to buy right now.

Our Methodology

We first sifted through the Finviz stock screener to compile a list of the top cheap stocks with a forward P/E ratio under 15 as of April 16. Then we picked the 10 hot stocks with highest gains over the past 1 month (over 15%), that were the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q4 2024. The hedge fund data was sourced from Insider Monkey’s database, which tracks the moves of over 900 elite money managers.

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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

10 Cheap Hot Stocks to Buy Right Now

10. Journey Medical Corporation (NASDAQ:DERM)

Forward P/E Ratio as of April 16: 14.16

Gain Over the Past 1 Month: 16.95%

Number of Hedge Fund Holders: 3

Journey Medical Corporation (NASDAQ:DERM) develops and commercializes pharmaceutical products for the treatment of dermatological conditions. Its marketed products include Qbrexzafor the treatment of primary axillary hyperhidrosis, Accutane for severe recalcitrant nodular acne, and Amzeeq for inflammatory lesions of non-nodular moderate to severe acne vulgaris.

The company’s near-term revenue depends on the launch and market adoption of MROSI, which is its newly FDA-approved oral treatment for rosacea. This product has already entered a $1 billion-plus treatment category. MROSI showed superior Phase 3 clinical results when compared head-to-head against the current oral standard of care (ORATIA) and placebo on both co-primary endpoints with high statistical significance.

To bring MROSI to this stage, Journey Medical Corporation (NASDAQ:DERM) made one-time payments that totaled $22 million in FDA filing fees and milestone payments to Dr. Reddy Labs in 2024. Following FDA approval, Journey immediately initiated market access efforts, which resulted in coverage for ~20% of the 188 million commercial lives and 4% of the 58 million Medicare lives. MROSI has the potential to achieve $200 million in annual sales in the US and $100 million internationally in 2025.

9. Contango Ore Inc. (NYSEAMERICAN:CTGO)

Forward P/E Ratio as of April 16: 10.17

Gain Over the Past 1 Month: 38.65%

Number of Hedge Fund Holders: 4

Contango Ore Inc. (NYSEAMERICAN:CTGO) is an exploration-stage company that explores and develops mineral properties in Alaska in the US. It explores for gold, silver, and copper ores. The company’s primary financial engine is its 30% stake in the Peak Gold Joint Venture, which operates the Manh Choh gold mine.

In 2024, the Peak Gold Joint Venture produced ~42,000 ounces of gold and exceeded expectations by 25%. This performance has carried into 2025, with the first mining campaign yielding ~65,000 ounces of recovered gold (on a 100% basis). In this, Contango’s share is ~19,500 ounces, which exceeded its 15,000 to 18,000 ounces target. As gold prices near $2,800 per ounce, Contango anticipates making~$40 million in revenue from its projected 60,000-ounce share of the Joint Venture’s 2025 output.

The company is also focused on replicating its efficient direct shipping ore (DSO) model with other high-grade deposits. Projects like Lucky Shot and Johnson Tract represent the possibility of doubling or tripling Contango’s overall gold production within the next 3 to 5 years, with an annual output of 100,000 to 200,000 ounces of gold equivalent. The Johnson Tract project is also currently in the permitting and infrastructure development phase, with PEA expected in April 2025.