In this article, we will take a look at some of the best cheap stocks to buy.
Just as we hunt for bargains in the commodity market-comparing relative prices, identifying discounted products, and getting the product most valued for our money—investing in the financial market isn’t any different. In both investments, price matters.
In a world of overpriced stocks, spotting the hidden gem is what differentiates a smart investor from an impulsive investor. One who realizes that value isn’t just about what you buy rather it’s more about what you pay, is the one who is likely to identify an overlooked but full of value stock.
Let’s first understand what a cheap stock actually implies. There are two most common interpretations of such a stock. First, a stock may be regarded as a cheap stock if it has a low share price. Second, an undervalued stock is more commonly known as a cheap stock. Our analysis resonates with the second interpretation, that a cheap stock is a stock that is trading below its intrinsic value based on factors like earnings, revenue, or assets. Thus, in the market, investors say it’s “cheap” relative to its true potential, making it a compelling investment.
One such measure to spot a cheap stock is through the forward price-to-earnings ratio. This is a measure used by investors to actually see how much they are paying for each dollar of a company’s earnings. A low P/E can signal an undervalued stock when compared to its competitors, historical average, and broader market average.
A report by Hoover Capital Management (HCM) analyzes the historical performance of value versus growth stocks through the French High Minus Low (HML) factor. The results from 97 years of data, from July 1926 to December 2023, strongly support value investing. The cumulative return of value stocks surpassed growth stocks by an impressive 3,000%. In other words, value investing has delivered a 30 times higher return on growth than growth investing. It can be further reinforced through the research by Economist Victoria Galsband, according to which cheap stocks outperformed growth stocks from 1975 to 2010 in every single G7 country, including Canada, the U.S., Japan, and the leading European countries.
Another report that analyzed the impact of additions or removals of companies from the S&P index on their valuations indicated that, as removals are associated with the undervaluation of the stock and vice versa, many companies removed from the index outperformed the market. A study by Research Affiliates highlighted that stocks taken out of the S&P between 1990 and 2022 outperformed those that were added by more than 5% annually. This provides a compelling case for our view that undervalued stocks, translated to cheap stocks, have a greater probability of yielding higher returns. Given this, let’s take a look at some of the best cheap stocks to buy.
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Our Methodology
We have compiled a list of 11 ridiculously cheap stocks through the Finviz screener. In doing so, stocks have been selected that have a lower than 5 price-to-earnings (P/E) ratio. These stocks cover a range of industries, from consumer products to natural resources exploration. These companies are then listed according to their P/E ratios, from highest to lowest.
At Insider Monkey, we are obsessed with hedge funds. 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).
11. Sally Beauty Holdings, Inc. (NYSE:SBH)
Forward P/E as of April 17: 4.55
Sally Beauty Holdings, Inc. (NYSE:SBH) is a leading distributor of professional beauty products in the United States. With mainly two segments, Sally Beauty Supply and Beauty Systems Group, the company offers beauty products in major categories like hair care, hair color, styling tools, and nail and skin care. Having almost 50 years of experience in the industry, SBH owns over 4,000 stores globally. The company considers itself on a mission to inspire a more colorful, confident, and welcoming world.
These days, investors are looking for companies that are enhancing margins, expanding e-commerce, and continuously returning capital to shareholders through buybacks. One such company is Sally Beauty Holdings, Inc. (NYSE:SBH), with a solid business model and a strong balance sheet. It is a stock for investors overlooking the short-term noise to capitalize on a ridiculously cheap, cash-generating asset with huge upside potential.
The recurring opportunities to buy the stock at a deep discount are keeping the investors hooked. Sally Beauty Holdings, Inc. (NYSE:SBH) has recently shifted its strategy towards higher margin e-commerce proceeds and product innovation in contrast to store expansion. This is based on the idea that to improve margins, cost controls, and returning excess capital to shareholders must be done.
Setting up distribution channels through Amazon, Walmart, and Instacart was a huge step forward. While the company lagged behind in embracing e-commerce, it is now in the green with decent gains. A recent report suggests that 44% of Sally Beauty Holdings, Inc. (NYSE:SBH) users are new customers, which is noteworthy for a mature business transitioning towards a refined business model.
On that note, Sally Beauty Holdings, Inc. (NYSE:SBH) is leveraging its huge established distribution network, supplier relationships, and current brand image to elevate profit margins in the years ahead. The core competency revolves around successfully partnering with existing e-commerce powerhouses to reach a much wider customer base online. Based on the one-year price target, SBH is expected to witness a growth of about 63.56%. It is among the best cheap stocks to buy.
10. Diversified Energy Company PLC (NYSE:DEC)
Forward P/E as of April 17: 4.43
Diversified Energy Company PLC (NYSE:DEC) is an energy company focusing on natural gas and liquids production, transport, and marketing. Through the company’s emphasis on well retirement, the strategy adopted revolves around acquiring existing, long-life assets and enhancing their environmental and operational performance before safely retiring them. With operations mainly in the U.S. Appalachian and Central regions, the company has a unique business model.
True to its name, Diversified Energy Company PLC (NYSE:DEC) is mastering the art of diversifying its risk through strategic acquisitions. The business model of the company is such that it emphasizes acquiring old wells with the goal of enhancing the recovery rate, controlling operating costs, and improving their residual life.
A testament to their diversifying approach is the latest Maverick Resources deal, whereby the revenue is anticipated to grow substantially, with $50 million expected in annual synergies. As natural gas prices have increased considerably since the deal was announced in December, some upside to the value gained in the transaction is much more likely.
The Summit acquisition is also among the core strengths of Diversified Energy Company PLC (NYSE:DEC) as it is forecasted to uplift the cash flows. While it may be small in size, the magnitude of margins is what keeps the investors interested, as it comes with no additional cost. Analysts expect it to increase “Coal Mine Methane” revenue and improve pricing, consequently leading Natgas to trade at a premium.
The management’s guidance for 2025 strengthens the bullish outlook for Diversified Energy Company PLC (NYSE:DEC). The company is projected to yield a free cash flow of $420 million, a rise of 200% in contrast to its standalone 2024 results. The company also has plans to expand its coal mine methane capture initiative, with a whopping 300% plus growth in free cash flow from this segment over the next 24 months. Thus, the company’s future looks quite promising, and we can consider now the right time to capitalize on this ridiculously cheap stock’s potential.
9. Invesco Mortgage Capital Inc. (NYSE:IVR)
Forward P/E as of April 17: 4.39
Invesco Mortgage Capital Inc. (NYSE:IVR) is a Georgia-based real estate investment trust that engages in investing, financing, and managing mortgage-backed securities and such other assets. Incorporated in 2008, the company considers itself on a mission to deliver attractive risk-adjusted returns to its stockholders, mainly through dividends and capital appreciation. It is among the best cheap stocks to monitor.
The 18% dividend yield of Invesco Mortgage Capital Inc. (NYSE:IVR) is what seeks an investor’s attention, coupled with a sound balance sheet and stable earnings coverage. Although in the past few months, the company, like all the mREITs, was vulnerable to risks like commercial tariff impositions, high inflation expectations, and higher interest rate volatilities, IVR’s recent focus shift from Agency residential mortgage-backed securities (Agency RMBS) to Agency commercial mortgage-backed securities (Agency CMBS) made it a big strategic game.
The relative transition to Agency CMBS can be considered opportunistic, as the spread of Agency CMBS to Treasuries is now more exposed to Treasuries than in the past, due to lower investor confidence towards the CMBS market. Thus, the risk premium has dropped in the last few months, owing to the demand for stable cash flows and income-generating assets amid interest rate fluctuations, further reinforcing that the strategy adopted by Invesco Mortgage Capital Inc. (NYSE:IVR) was certainly the right one.
The company has reverted back to its initial model with relatively higher exposure to Agency RMBS, as with volatility now declining, this segment is now more robust. Brian Norris, the Chief Investment Officer, made the following comment:
“We continue to selectively capitalize on historically attractive Agency RMBS spreads, and believe the sector is poised to perform well as interest rate volatility continues to moderate. Our liquidity position provides a substantial cushion for further potential market stress, while also providing capital to deploy into our target assets as the investment environment improves.”
The shifting in the spreads just reflects the company’s ability to capitalize on the evolving market trends. For investors seeking higher yields and lower valuations in the mREIT sector, Invesco Mortgage Capital Inc. (NYSE:IVR) is just the right cheap stock.
8. Lincoln National Corporation (NYSE:LNC)
Forward P/E as of April 17: 4.17
Lincoln National Corporation (NYSE:LNC) is a financial holding company operating various insurance and retirement businesses through its subsidiaries. The key segments of this Fortune 200 American company include Annuities, Life Insurance, Group Protection, and Retirement Plan Services. From businesses to individuals, the products and services are offered across the United States and the UK. Headquartered in Radnor, the company is known for its integrity, forward-thinking, and optimism.
Lincoln National Corporation (NYSE:LNC) is one of those enterprises gaining traction due to its strategic partnerships. Just recently, the company announced entering a partnership with Bain Capital, a top global investment firm, allowing LNC to expedite its strategy, identify value creation opportunities, and deliver growth capital in the areas of strategic focus. This 9.9% ownership stake in LNC will make Bain Capital a strategic asset management partner across a range of asset classes.
The giant is also collaborating with Partners Group, a leading private markets firm, for an evergreen fund to invest in the globally varied cross-sector private markets royalty portfolio. Using a relative value approach, Partners Group will invest in high-potential sectors like pharmaceuticals and entertainment, among other emerging high-growth industries, including energy and sports.
The strategic activeness of Lincoln National Corporation (NYSE:LNC) reflects strong growth and profitability, stemming from operational efficiency, market footing, and a solid customer base. Our bullish thesis is mainly based on the diversification of the business’s investment portfolio. A perfect blend of debt securities, particularly government-backed, fixed-interest, and inflation-linked, is what it is.
While life insurance premiums are anticipated to increase 1.5% year-over-year in developed countries, the greatest potential lies in the developing economies this 2025. Among these are China, India, and Latin America, with premiums expected to rise by at least 5%. Thus, in this moderately growing market, Lincoln National Corporation (NYSE:LNC) is one of the best cheap stocks with huge upside potential.
7. Weibo Corporation (NASDAQ:WB)
Forward P/E as of April 17: 4.16
Weibo Corporation (NASDAQ:WB) is a China-based social media platform that assists users in creating, distributing, and discovering Chinese-language content. With mainly two segments: Advertising and Marketing Services, and Value-Added Services, the company offers users public self-expression in real time with a platform for social engagement and interaction, as well as content aggregation and distribution. WB works towards a live viral conversation stream through its asymmetric nature.
Weibo Corporation (NASDAQ:WB) is increasingly making investments in AI, with a focus on the vertical content ecosystem. Management recently announced a shift in its strategy towards AI-related technologies, which includes elevating the recommendation system and integrating AI into products like intelligent search and advertising solutions. Hence, like any other smart enterprise, Weibo Corporation (NASDAQ:WB) is jumping on the AI bandwagon.
At times when there are macroeconomic uncertainties and high tariff risks, analysis suggests that the actual impact of tariffs could be much less for Weibo Corporation (NASDAQ:WB). As WB relies heavily on China as a social media platform and does not export goods directly to the U.S., the impact of tariffs would most likely be implicit. We already know that the Chinese government is welcoming any stimulus, and if it happens, the effect of trade barriers could be negated. Moreover, it can not be ignored that the tensions between China and the U.S. have existed for years, so these tariffs are not something new.
The optimism surrounding Weibo Corporation (NASDAQ:WB) stems from a solid track record of generating profits, generous dividends, and growing strategic emphasis. The management has three main goals for this year: integrating social products to boost user engagement, enhancing the vertical content ecosystem, and improving operational efficiency through AI and other technologies. The more the company successfully delivers these goals, the more we can rely on this cheap stock to return value.
6. Helen of Troy Limited (NASDAQ:HELE)
Forward P/E as of April 17: 4.13
Helen of Troy Limited (NASDAQ:HELE) is a leading global consumer products company with a focus on creative solutions through well-diversified and widely recognized brands. Headquartered in Hamilton, Bermuda, the company mainly operates through the Home and Outdoor and Beauty and Wellness segments. HELE emphasizes product innovation, product quality, and competitive pricing.
Helen of Troy Limited (NASDAQ:HELE)’s recent acquisition of Olive & June, a high-end nail care brand, is what makes it a bull. This is a testament to the giant’s diversification approach, as the traditional offerings were limited to hair appliances and skin care. In the fourth quarter, the acquisition is anticipated to contribute $17 to $19 million in revenue, with even further upside expected in the years ahead. Noel Geoffroy, the Chief Executive Officer, made the following comment:
“We see significant growth potential in Olive & June as the team continues to build on the brand’s strength and consumer obsession and breakthrough commercial and product innovation in addition to leveraging Helen of Troy capabilities to help expand availability with increased distribution.”
Helen of Troy Limited (NASDAQ:HELE) is consistently investing in product innovation and marketing, the two key pillars of any leading business strategy. This, along with improved flu-related sales, distribution benefits, and gains from the acquisition, can assist the company in making positive revenue growth in the coming quarters.
While the company is at high risk of tariffs, as it is heavily sourcing goods from China, the impact can be negated through cost savings under Project Pegasus, volume leverage, synergy savings, and strategic pricing considerations in the long haul. Much of the success of Helen of Troy Limited (NASDAQ:HELE) lies in the cost minimization strategies in FY26, similar to those of FY25, under the Project Pegasus initiative.
The one-year price target of $78.33 highlights a whopping 135% increase in the stock price. With that being said, HELE is poised for long and sustainable growth and is one of the best cheap stocks to invest in.
5. Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR)
Forward P/E as of April 17: 3.82
Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR) is a Brazilian company that explores, produces, and markets oil and gas. Controlled by the Brazilian government, the company operates through three segments: Exploration and Production; Refining, Transportation and Marketing; and Gas and Power. This integrated energy company considers operating at low costs with low carbon emissions its top priority. PBR is among the best cheap stocks to buy.
Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR) has increasingly caught the eyes of many investors recently, owing to the Trump tariff threats and positive revisions in production expectations. We believe that the stock, with an attractive valuation, has even more room to grow in the times ahead.
The plan to impose 25% tariffs on countries buying O&G from Venezuela and possible restrictions on the exports of other countries means price hikes. While the constrained supply can benefit Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR) with tailwinds in prices, there can also be similar restrictions that the company can face amid the growing global recession. This is where the trade restriction offers both risk and opportunity. While things remain unclear for now, the coming days will speak volumes.
Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR) has set a clear vision for 2025, and that’s what we like to picture. The company has set new targets for oil production with a forecast of 2.8 million boe/d. Not only this, three new production systems are set for 2025 with an increase in the gas supply. Just recently, the management disclosed that it’s in talks with U.S. liquefied natural gas suppliers for a long-term import deal.
With the company reducing the financial burden by repaying its debt, Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR) has reported its lowest amount of financial debt in 17 years, and a forward price-to-earnings ratio of 3.82 implies a high safety margin for investors as the shares continue to pay steady dividends. Having said that, PBR is definitely one to watch.
4. ACCO Brands Corporation (NYSE:ACCO)
Forward P/E as of April 17: 3.58
ACCO Brands Corporation (NYSE:ACCO) is a dynamic user-focused provider of select categories of academic, consumer, and business products. This Illinois-based company provides branded solutions and technologies used at home, office, school, and more. With mainly two segments, ACCO Brands Americas and ACCO Brands International, the giant offers its products across various countries, including the U.S., Canada, Australia, and New Zealand. The company aims to help people work, learn, play, and thrive, using its branded products.
A business that is well-diversified, increasingly producing cash from its operations, and is more towards an asymmetric bet, with more upside than downside, ACCO Brands Corporation (NYSE:ACCO) is in the right direction.
In its latest earnings, the management has unveiled plans to shift its strategies to support quarterly dividends and reduce debt, and as long as the share remains undervalued, the company has an appealing buyback approach. This, of course, can only be achieved if the terms of the credit agreement are not violated, thus promoting an improved tax-friendly way to return cash flow to the shareholders.
ACCO Brands Corporation (NYSE:ACCO)’s revenues are gaining momentum post-pandemic. This has much to do with the enterprises bringing their employees back to the office. The 5-day, in-office work week, also adopted by 26 of the Fortune 500 companies, ensures sustainable growth for a brand that markets everyday supplies used at work and school, among other institutions. Having said that, the working environment transition reflects the possible returns to growth, both organically and inorganically, for ACCO Brands Corporation (NYSE:ACCO).
The company is also on a path to improving the cost structure. Owing to its cost-management program, ACCO Brands Corporation (NYSE:ACCO) has achieved $25 million in cost savings. Management anticipates increasing this to $40 million in FY25, with $35 million coming through in FY26. This plan to consolidate the geographical footprint and reduce the manufacturing footprint, along with the forward-looking measures taken by the company, indicates that ACCO is headed north. It is among the best cheap stocks to invest in.
3. Upland Software, Inc. (NASDAQ:UPLD)
Forward P/E as of April 17: 3.00
Upland Software, Inc. (NASDAQ:UPLD) is an AI-powered cloud software that provides a range of cloud-based enterprise work management solutions for the information technology, process excellence, finance, professional services, and marketing functions within an organization. From corporations and government agencies to small- and medium-sized enterprises, this Texas-based company serves a wide clientele. The tech giant claims to boost revenue, reduce costs, and deliver immediate value for its users.
Although the past performance of the stock hasn’t been quite remarkable, we believe that things will change. Upland Software, Inc. (NASDAQ:UPLD) is anticipating to boost sales in FY25 due to revamping its sales team, reducing financial debt to save interest costs, and expanding operating margins through the current cost refinements.
UPLD is a stock with a one-year price target of $4.25, indicating an upside of more than 80%. As mentioned in their earnings call, the management expects to see some positive growth trajectory, guiding to 2.5% core organic growth in 2025. This positive outlook is based on the entry of 110 new clients in Q4 and an expanded relationship with 291 existing customers, with expectations of more in the times ahead.
Upland Software, Inc. (NASDAQ:UPLD)’s strategic investments are what we are counting on. The recent investment in tech-centred India enhances the development capacity and allows the company to empower AI in its product portfolio, particularly the BA Insight. To lead the AI life, the company has also developed an AI-driven agent assistant, Panviva, and an AI Assist, Qvidian.
For anyone who wants to play the risky stock game, UPLD is just the stock with high risk but good upside potential.
2. Herbalife Ltd. (NYSE:HLF)
Forward P/E as of April 17: 2.97
Herbalife Ltd. (NYSE:HLF) is a global nutrition company providing health and wellness products. This California-based company operates through various geographical segments, including North America, Latin America, EMEA, Asia Pacific, and China. The core offerings of the company include meal replacements, a snack portfolio, and dietary supplements. With operations in more than 90 countries, the company considers improving nutritional habits all over the world with exquisitely flavored, science-based nutrition products to assist people in maintaining a balanced lifestyle.
Just a few days ago, investment banking firm D. A. Davidson & Co. expressed optimism for Herbalife Ltd. (NYSE:HLF) by increasing its price target to $14 from $7.50, upgrading to Buy from Neutral. This guidance is driven by the company’s gradual growth in its new and existing distributors in the last few quarters. Additionally, the firm believes that the appointment of Stephan Gratziani as the chief executive officer will prove fruitful for Herbalife Ltd. (NYSE:HLF) as several measures have been taken in the areas of recognition, digital tools, distributor training, and information-sharing systems.
The company’s MLM business model is what sets it apart from an investor’s perspective. Herbalife Ltd. (NYSE:HLF) adopts an approach that integrates direct selling and multi-level marketing with independent distributors forming a network. The investments in technology to help the members improve their online channels reinforce that the strategies chosen are well-structured. And with the weight loss segment contributing the most to the company’s revenues, we can only expect it to grow further in this calorie-counting world.
Considering this, the analysts have set a one-year price target for Herbalife Ltd. (NYSE:HLF) as high as $13 and as low as $7. While the true value lies in management changes and strategic initiatives like the loyalty card program in China, the company can deliver returns if it’s successful in capitalizing on the business model.
1. Bausch Health Companies Inc. (NYSE:BHC)
Forward P/E as of April 17: 1.04
Bausch Health Companies Inc. (NYSE:BHC) is a pharmaceutical and medical device company that develops and markets a range of products in the areas of gastroenterology (GI), hepatology, neurology, and dermatology, among others. The core segments of the company include Salix, Solta Medical, Diversified, and Bausch + Lomb. Headquartered in Laval, Canada, the company is dedicated to becoming a globally integrated healthcare company that is trusted and valued by patients, investors, and employees.
In a world where one in eight population and one in five U.S. adults fight an invisible battle, the need for mental healthcare solutions is quite evident. Having said that, research co-led by Harvard Medical School and the University of Queensland shows that around 50% of the global population will win the battle against mental health challenges. Over some years, mental health-related solutions have gained significant popularity, and Bausch Health Companies (NYSE:BHC) is one of the few pharma companies facing an unprecedented market opportunity to shift the treatment paradigm for TRD (treatment-resistant depression), which is a $3 billion market in itself.
Although the company is under heavy debt and has a record of financial woes, the repositioning of Aplenzin for treating TRD can prove to have both clinical and financial opportunities. This reposition allows Bausch Health Companies Inc. (NYSE:BHC) to not only enhance the value of the drug and address an acute unmet need but also elevate revenues.
On that note, the management has expressed optimism regarding the future of Bausch Health Companies Inc. (NYSE:BHC), with a revenue guidance between $4.95 billion and $5.1 billion. The company is heavily focusing on growth through innovation, driven by its RED-C program and the potential success surrounding the Next Generation Fraxel device. Thus, for BHC, it is not the time to be on the sidelines of this ridiculously cheap stock.
Overall, BHC ranks first on our list of ridiculously cheap stocks to invest in. While we acknowledge the potential of cheap stocks, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than BHC but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
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