Market Overview - The S&P 500 index briefly crossed 7000 points for the first time on January 28, 2026, rebounding nearly 40% since April 2025 lows, with five record closes noted by January 27, 2026 [1] - The Nasdaq Composite has seen modest gains in 2026, while the Russell 2000 has surged nearly 7% year-to-date as of January 29, 2026, outperforming large-cap peers for 14 consecutive trading sessions, the longest streak since 1996 [2] Valuation Concerns - The Shiller S&P 500 price-to-earnings ratio is currently at 41, the highest since the dot-com bubble, while the trailing P/E ratio is at 31.52, significantly above the historical average of 16.2 [3] - Bank of America's head of US equity strategy, Savita Subramanian, indicates that the S&P 500 is expensive, predicting it will reach 7,100 by year-end 2026, which is among the lowest forecasts on Wall Street [3] Investment Strategy - Goldman Sachs analysts predict that value stocks will remain favored if US economic momentum strengthens, noting that these stocks, with forward P/E ratios below 15, have outperformed higher-valuation stocks at the start of the year, achieving a 15% return in the last six months of 2025 [4] Stock Selection Methodology - The list of best cheap stocks for 2026 was created using screeners like TradingView and Finviz, focusing on US-listed stocks with forward P/E ratios between 3 and 15 and a positive upside potential of at least 20%, ranked by hedge fund holdings as of Q3 2025 [7][8] HNI Corporation - HNI Corporation (NYSE:HNI) is highlighted as a top cheap stock for 2026, with a forward P/E of 11.92 and an upside potential of 58.46% [9] - Benchmark Co. raised its price target for HNI to $75 per share from $60, citing a planned acquisition of Steelcase Inc. valued at approximately $2.2 billion, expected to yield annual cost synergies of about $120 million [10] - HNI's shares are priced below historical values, with a P/E ratio of 13.35, and the company has a history of consistent dividend payments over 55 years [11] Sanofi SA - Sanofi SA (NASDAQ:SNY) is also listed as a cheap stock for 2026, with a forward P/E of 9.02 and an upside potential of 25.11% [15] - Citi Research initiated coverage on Sanofi with a Neutral rating and an €85 price target, expressing concerns over pipeline setbacks affecting long-term growth [16] - Sanofi's current valuation reflects these setbacks, with analysts noting that the market is unlikely to reward the stock with a higher multiple without evidence of pipeline improvement [17] - Positive results were reported for Sanofi's experimental medicine amlitelimab in Phase 3 clinical studies for atopic dermatitis, indicating potential for future growth [18]

Group 1 - The current market environment makes it challenging to find value stocks, particularly in the biotech sector, where Harmony Biosciences specializes in treatments for rare diseases [1] - Harmony's pitolisant treatment, marketed as Wakix, has been financially lucrative, with significant revenue growth since its FDA approval in 2019 [2][4] - Harmony's revenue reached $160 million in the year following FDA approval, with a compound annual growth rate of around 40%, projecting nearly $870 million in sales for 2025 and over $1 billion in 2026 [4] Group 2 - Unlike many biotech firms that increase spending on pipeline research post-approval, Harmony became profitable in 2021, with net income rising over five times to $186 million in the past 12 months [5] - Despite strong financial performance, Harmony's stock price has remained flat since its IPO, partly due to concerns over the expiration of Wakix's patent in early 2030 and potential generic competition [6] - Controversies and litigation surrounding Wakix, along with long-term worries about patent cliffs and Harmony's pipeline, have negatively impacted investor sentiment [7]

Core Viewpoint - The Vanguard Value ETF (VTV) and the State Street SPDR Portfolio S&P 1500 Composite Stock Market ETF (SPTM) serve different investment strategies, with VTV focusing on large-cap value stocks and SPTM providing broader market exposure across various market capitalizations [2][9]. Cost & Size - VTV has an expense ratio of 0.04% and assets under management (AUM) of $218 billion, while SPTM has a slightly lower expense ratio of 0.03% and AUM of $12 billion [3][4]. - The one-year return for VTV is 11.48%, compared to SPTM's 12.91%, and VTV offers a higher dividend yield of 2.05% versus SPTM's 1.13% [3][4]. Performance & Risk Comparison - Over the past five years, VTV has a maximum drawdown of -17.03%, while SPTM has a higher drawdown of -24.15% [5]. - An investment of $1,000 in VTV would grow to $1,622 over five years, whereas the same investment in SPTM would grow to $1,765 [5]. Portfolio Composition - SPTM tracks a broad U.S. equity index with 1,510 stocks, heavily weighted towards technology (34%), followed by financial services (13%) and consumer cyclical (11%) [6]. - VTV focuses on 312 large-cap value stocks, with significant sector exposure in financial services (25%), healthcare (16%), and industrials (13%) [7]. Investment Implications - SPTM offers broader market exposure and includes stocks from various sectors and sizes, making it suitable for investors seeking overall market performance [9]. - VTV targets large-cap value stocks, which may provide more stability and higher dividend income potential, appealing to income-focused investors [10].

Core Viewpoint - The article compares U.S. Bancorp (USB) and Northern Trust Corporation (NTRS) to determine which stock is more attractive to value investors, highlighting USB's stronger earnings outlook and better valuation metrics [1][3]. Valuation Metrics - USB has a forward P/E ratio of 11.22, while NTRS has a forward P/E of 15.99, indicating that USB may be undervalued compared to NTRS [5]. - USB's PEG ratio is 1.01, compared to NTRS's PEG ratio of 1.27, suggesting USB has a more favorable growth outlook relative to its price [5]. - USB's P/B ratio is 1.48, while NTRS has a P/B of 2.4, further indicating USB's relative undervaluation [6]. Investment Ratings - USB currently holds a Zacks Rank of 2 (Buy), while NTRS has a Zacks Rank of 3 (Hold), suggesting a stronger investment case for USB [3]. - USB has been assigned a Value grade of B, whereas NTRS has a Value grade of C, reinforcing USB's position as the more attractive option for value investors [6].

Market Outlook - The current broadening of the market is expected to be durable, with a stronger economy favoring value and smaller stocks [2][3] - Anticipation of two more rate cuts is expected to benefit smaller stocks more than larger ones [3][4] Economic Indicators - Short-term interest rates are crucial for smaller stocks, while the 10-year bond rates are not expected to decline significantly [4] - Fiscal tailwinds are expected to support consumer spending, contributing to a strong economic outlook heading into 2026 [5][6] Stock Valuation - Smaller and value stocks may face valuation ceilings compared to high-growth stocks, but lower price-to-earnings (PE) ratios can still yield good returns with modest growth [6][7] - Companies with a PE of 15 can achieve substantial returns even with growth at nominal GDP levels, unlike those with higher PE ratios [7] AI Integration - The current year is seen as pivotal for AI adoption, with only 15-20% of firms having fully integrated AI to reduce costs [8] - Moderate incorporation of AI techniques could lead to profit margins rising by 2-3 percentage points across firms [11] Labor Market Implications - The unemployment rate remains low, allowing job seekers to find employment despite potential job displacement from AI [10] - Historical trends suggest that new job opportunities typically arise even as technology evolves, though the speed of this transition remains uncertain [9]

分组1 - The individual has a decade of experience in a Big 4 audit firm, focusing on banking, mining, and energy sectors, providing a strong foundation in finance and strategy [1] - Currently serves as the Head of Finance for a leading retail real estate owner and operator, overseeing complex financial operations and strategy [1] - Active investor in the U.S. stock market for 13 years, with a portfolio that reflects a balanced approach, emphasizing value stocks while maintaining exposure to growth opportunities [1] 分组2 - The investment philosophy is based on thorough research and a long-term perspective, aiding in navigating various market cycles successfully [1] - The aim is to uncover promising under-the-radar stocks that may not yet be recognized by the broader market [1] - The combination of auditing and finance background with hands-on investing experience allows for unique insights and actionable ideas for investors [1]

Core Viewpoint - Investors in the Retail - Restaurants sector should consider Restaurant Brands (QSR) as a potentially undervalued stock compared to Chipotle Mexican Grill (CMG) [1] Group 1: Zacks Rank and Earnings Outlook - Restaurant Brands has a Zacks Rank of 2 (Buy), indicating a positive earnings estimate revision trend, while Chipotle Mexican Grill has a Zacks Rank of 3 (Hold) [3] - The improving earnings outlook for QSR makes it a more attractive option for value investors [7] Group 2: Valuation Metrics - QSR has a forward P/E ratio of 17.51, significantly lower than CMG's forward P/E of 33.94 [5] - The PEG ratio for QSR is 2.54, while CMG's PEG ratio is higher at 3.86, indicating QSR may be undervalued relative to its expected EPS growth [5] - QSR's P/B ratio stands at 4.44, compared to CMG's P/B ratio of 16.66, further suggesting QSR's relative undervaluation [6] - Based on these valuation metrics, QSR holds a Value grade of B, while CMG has a Value grade of C [6]

Investors looking for stocks in the Transportation - Services sector might want to consider either DHL Group Sponsored ADR (DHLGY) or Expeditors International (EXPD) . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The Z ...

Core Insights - The price-to-earnings (P/E) ratio is a popular metric among investors for identifying undervalued stocks, but it has limitations, including its inability to value loss-making firms and susceptibility to accounting manipulation [1][5] - The EV-to-EBITDA ratio is considered a more comprehensive alternative, providing a clearer picture of a company's valuation by accounting for debt and offering insights into profitability [2][3][4] Valuation Metrics - EV-to-EBITDA is calculated by dividing a company's enterprise value (EV) by its earnings before interest, taxes, depreciation, and amortization (EBITDA), making it a useful tool for assessing companies with varying levels of debt [3][4] - A lower EV-to-EBITDA ratio indicates a potentially undervalued stock, making it attractive for acquisition targets [4][5] - The P/E ratio does not account for debt, which can lead to misleading valuations, especially for companies with significant leverage [4][5] Screening Criteria for Value Stocks - Parameters for screening value stocks include an EV-to-EBITDA ratio lower than the industry median, a P/E ratio below the industry median, and a price-to-book (P/B) ratio less than the industry average [8][10] - Additional criteria include a price-to-sales (P/S) ratio lower than the industry median, estimated one-year EPS growth greater than or equal to the industry median, and a minimum average trading volume of 50,000 shares [10][11] Selected Stocks - Plains GP Holdings, L.P. (PAGP) has a Zacks Rank of 1 and a Value Score of A, with an expected year-over-year earnings growth rate of 27% for 2026 [12][13] - DNOW Inc. (DNOW) also holds a Zacks Rank of 1 and a Value Score of A, with an expected earnings growth rate of 18.5% for 2026 [13][14] - Gibraltar Industries, Inc. (ROCK) has a Zacks Rank of 2 and a Value Score of A, with an expected earnings growth rate of 11% for 2026 [14] - Miller Industries, Inc. (MLR) is another Zacks Rank 2 stock with a Value Score of A, showing a remarkable expected earnings growth rate of 139.5% for 2026 [15] - Sally Beauty Holdings, Inc. (SBH) has a Zacks Rank of 2 and a Value Score of A, with an expected earnings growth rate of 8.4% for fiscal 2026 [15][16]

Group 1 - The article discusses the launch of a new investment initiative called the Voyager Portfolio, aimed at exploring lesser-known stocks that have not been widely recommended [3][6]. - The Voyager Portfolio seeks to identify promising stocks that are overlooked by analysts, potentially leading to significant investment opportunities [5][7]. - The initiative is inspired by NASA's Voyager spacecraft, which aimed to discover more about the Solar System, paralleling the goal of uncovering hidden investment gems in the stock market [6]. Group 2 - The Motley Fool offers various avenues for stock investment ideas, including free and premium services that provide different perspectives on stocks [4]. - Despite the extensive coverage of stocks within the Motley Fool universe, there remain thousands of stocks that have not been recommended, some of which may present attractive investment opportunities [5]. - The use of AI-powered tools by the Motley Fool aims to enhance the search for successful companies that fit well within diversified portfolios [4].