Top 5 undervalued stocks to watch in 2026

What are undervalued stocks?

Undervalued stocks are the shares of companies with stock prices that are perceived as being lower than they should be – or what their ‘fair’ value is.

The principle behind trading undervalued stocks is that the market will, inevitably, correct itself, and the stock price will eventually reach its fair market value. This means that if you buy a stock while it’s undervalued, you would, in theory, make a profit on it when it increases.

It’s important not to conflate ‘cheap’ with ‘undervalued’ when you’re looking for stocks trading below their fair value. The trick is to find companies that have quality stocks that will rise over time, versus junk stocks at low prices.

Why would a stock be undervalued?

There are multiple reasons why a stock might be undervalued, such as:

• Market changes: Markets can crash or correct themselves, which can tank a company’s stock price
• Negative news: Negative press, and economic and political news could cause a stock price to plummet
• Cyclical changes: Some stocks and sectors are cyclical, meaning they perform well during certain times or economic periods, and tend to dip during others. It’s at these downturns that you can find undervalued stocks
• Overestimated results: If a stock doesn’t perform as well as analysts expect it to, stock traders might sell their holdings, causing the stock to drop below fair value
• Company recognisability: Some companies are simply not familiar enough to get media or analyst coverage, which can lead to them being unknown to stock traders

How to find undervalued stocks

Two good ways to find undervalued stocks are to look at companies’ price-to-earnings ratios (P/E ratios) and their market capitalisations.

A P/E ratio is calculated by dividing the stock price by the earnings per share (EPS). This tells you what investors are willing to pay for a share.

A lower P/E ratio can (but not always) indicate an undervalued company, whereas a higher P/E ratio could signal future growth – but again, not every time.

Market capitalisation is also important because it can tell you how profitable the company is. You can calculate the market cap by multiplying the current stock price by the total number of stocks outstanding (ie shares held by stockholders). 

Where to find undervalued stocks

There are a few places to look for undervalued shares. These include:

• Undervalued sectors: Most sectors go through periods of bull and bear markets. If you find an industry that’s currently down, you could find a real gem in the sector, capable of significant future growth
• News: Pay attention to the news related to a company and sector. Market crashes, bad press, and political and social changes could all lead to a business becoming undervalued. But beware here – there’s a big difference between cheap and undervalued stocks. Don’t just go for the first company to fall on hard times
• Emerging sectors: New and innovative sectors, such as the biotechnology industry, can contain undervalued stocks that are just waiting for the sector to flourish
• Technical analysis: Using indicators, such as Fibonacci levels and a moving average, can indicate levels of support and resistance, helping you identify potentially undervalued stocks. You can also try a stock screener tool to help you filter companies that might be undervalued

Advantages of undervalued stocks

There are numerous pros to trading undervalued stocks, including:

• Lower stock prices: Stock prices of undervalued companies often trade at a steal, giving investors the ability to buy a large portion of stocks
• Potential for higher returns: Because stock traders can purchase a large number of shares for a relatively low price, should the stock price rise to meet its fair market value, traders can significantly increase their profits
• Built-in safety margin: If the stocks are trading at low prices, you’ve got a built-in safety margin because, should your analysis be wrong, the lower entry price offers some protection

Risks of undervalued stocks

At first glance, it might look as though there aren’t that many risks when trading undervalued stocks, except for the obvious ones – volatility, socio-economics, picking a worthless stock and similar factors. But sometimes, there are reasons why a stock is undervalued that aren’t always obvious.

For example, a stock might be undervalued because of internal structural business changes or financial management issues.

This is why it’s important to thoroughly research any company you plan to trade before taking a position on it – as well as have a good risk management strategy in place.

Top 5 undervalued stocks to watch in 2026

We’ve chosen these five stocks based on their market caps, P/E ratios and the diversification they offer across regions and sectors.

All figures are accurate as of 24 April 2026.

Overview of the stocks in this article

You can CFD trade all the companies on this list through our platform and stock trade all except Yancoal Australia.

1. Sasol Limited (JSE: SOL)

Sector: Process industries

Market cap: R134 billion

P/E ratio: 59

Sasol is a major energy and chemical company, based in South Africa, with a significant global footprint. At its core, the company is known for its advanced technology that converts coal and gas into high-quality liquid fuels, chemicals and low-carbon electricity.

The company is often viewed as undervalued because the market tends to focus heavily on the fluctuating price of oil and the historical debt associated with its large international projects. While these factors are important, they can sometimes overshadow the inherent value of its unique technology and its dominant position in the local market.

Stock traders may find Sasol appealing because of its status as a foundational industrial giant. For those looking to gain exposure to the energy sector, it offers a way to invest in a company with diverse revenue streams and a clear plan for operational improvement.

CFD traders might be drawn to the stock due to its sensitivity to global commodity prices. Because the share price often moves in tandem with oil and chemical markets, it provides frequent opportunities to speculate on short-term price volatility.

Risks

• Sasol is heavily influenced by the volatility of the South African rand and shifting global regulations regarding carbon emissions, which could impact its long-term production costs

2. Woodside Energy Group Limited (ASX: WDS)

Sector: Energy Minerals

Market cap: A$60.33 billion

P/E ratio: 14.43

Woodside Energy Group is a premier Australian energy producer that focuses primarily on the exploration, development and production of oil and natural gas. Following a massive merger with the petroleum arm of BHP, the company has transformed into one of the largest independent energy businesses in the world.

It operates major offshore platforms and liquefied natural gas (LNG) plants, playing a vital role in supplying energy to the Asian market.

The perception that Woodside Energy Group is undervalued often stems from a broader market hesitation toward traditional energy stocks. Stock traders sometimes discount the company due to the long timelines required for its major offshore projects and the significant capital investment they demand.

Also, the share price can lag behind the company’s actual earnings potential when the market is preoccupied with the transition away from fossil fuels

For stock traders, the company offers a combination of scale and a history of returning value through dividends. Its portfolio of high-quality assets provides a level of stability that is attractive for those seeking reliable energy exposure.

CFD traders are likely attracted to the liquidity of the stock and the significant price swings that occur during periods of geopolitical tension or changes in global energy demand.

Risks

• The primary risks involve environmental regulations and the potential for project delays. As global policies shift towards renewables, any unexpected hurdles in the company’s new developments or a sustained drop in gas prices could impact its financial performance

3. Yancoal Australia Limited (ASX: YAL)

Sector: Energy Minerals

Market cap: A$9.47 billion

P/E ratio: 21.51

Yancoal Australia is one of Australia’s largest pure-play coal producers. The company operates a suite of open-cut and underground mines across New South Wales, Queensland and Western Australia. It specialises in producing high-quality thermal coal, which is used for electricity generation and metallurgical coal, which is an essential ingredient in steelmaking.

By focusing on low-cost production and high-grade products, the company has established itself as a preferred supplier for major power utilities and steel mills across Asia, where coal remains a critical component of the energy mix.

The reason Yancoal Australia Limited is frequently flagged as undervalued is largely due to the ESG (Environmental, Social, and Governance) discount. Many large institutional funds have moved away from coal, which has pushed the share price down regardless of how much profit the company is generating.

Because the company produces significant amounts of cash and carries very little debt, its valuation often looks exceptionally low when compared to its actual earnings.

Stock traders may be attracted to Yancoal Australia specifically for its potential to pay out substantial dividends from its excess cash reserves.

CFD traders might find the stock useful for hedging or speculating on the specific price of thermal coal, as the shares are highly sensitive to the spot prices set in global markets.

Risks

• Risks for stock traders are primarily centred on the long-term decline in coal demand as the world shifts to renewable energy

4. Volex Plc (LSE: VLX)

Sector: Producer manufacturing

Market cap: £1.07 billion

P/E ratio: 25

Volex is a specialist manufacturer that provides power cords, cable assemblies and connectors for a wide range of sophisticated industries. Based in the UK, the company operates a global manufacturing network that serves sectors such as electric vehicles, medical equipment and data centres.

Its business model relies on technical expertise and a highly efficient supply chain to deliver custom solutions to large international brands.

The company is often considered undervalued because it is a mid-sized company that sits in a relatively pedestrian part of the technology sector. Suppliers like Volex often fly under the radar. Its steady growth and successful acquisition strategy are sometimes overlooked by the broader market, leading to a stock price that doesn't fully reflect its essential role in high-growth industries like the EV market and the expansion of cloud computing infrastructure.

Stock traders might find Volex Plc appealing because it offers a diversified way to benefit from several massive technological trends at once. Rather than betting on a single car brand, they can invest in the company that provides the essential components to many of them.

CFD traders may appreciate the stock for its responsiveness to industrial news and earnings reports, which can lead to clear price trends.

Risks

• The company operates in a highly competitive market with thin margins, and its reliance on raw materials like copper means that a sudden spike in commodity prices could eat into its profits if it cannot pass those costs on to customers

5. Spectrum Brands Holdings Inc (NYSE: SPB)

Sector: Consumer durables

Market cap: US$1.96 billion

P/E ratio: 19.54

Spectrum Brands is a diversified consumer products company that manages a variety of well-known household brands. Based in North America, its products span several categories, including home appliances, gardening supplies, pet care and home security hardware.

The undervalued status of Spectrum Brands is often linked to its ongoing efforts to simplify its business. In recent years, the company has been selling off certain divisions to focus on its core strengths and pay down debt. During these periods, the market can become impatient or confused about the company’s ultimate direction, which often keeps the share price lower than the sum of its parts.

Stock traders may find the company appealing due to its defensive nature; since it sells everyday household items, it is often viewed as a safer bet during times of economic uncertainty.

CFD traders might look at the stock during retail earnings seasons, as the share price can be quite reactive to consumer spending data and shifts in household trends.

Risks

• Risks include intense competition from private label or generic supermarket brands that may offer lower prices
• Any significant disruption in global shipping can heavily impact a company that moves such a large volume of physical goods

How to trade undervalued stocks with IG UAE

CFDs

1. Open a CFD trading account with IG UAE
2. Search for undervalued stocks on the IG platform
3. Decide whether to go long (buy) or short (sell)
4. Choose your position size
5. Set stop-loss and limit orders
6. Place your trade and monitor it

Stock trading

1. Open a stock trading account with IG UAE
2. Search for undervalued stocks
3. Choose the stock you want to buy – try our stock screener
4. Determine how many shares you want to purchase
5. Place your order
6. Monitor your investment and collect any dividends

FAQs about undervalued stocks

Footnotes

1. TradingView, April 2026
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