Recently, while researching investment opportunities for 2026, I found that many people are paying attention to low-priced stocks, but most people’s methods for picking stocks are a bit chaotic. I’ve also been thinking over the past few months about how to find truly promising low-priced stocks, and today I’d like to share what I’ve learned.

Low-priced stocks are attractive mainly because the cost to enter is low, but the key is to find the right targets. I’ve noticed that many people buy low-priced stocks purely by luck, and the result is that they lose badly. In fact, there’s a systematic way to choose the low-priced stocks with the most potential.

First, you need to understand what truly counts as potential. A cheap price doesn’t automatically make a stock a potential winner. I’ve summarized three core criteria. First, valuation must truly be low—I usually look for stocks with PE below 15 and PB less than 1. Second, the company must be able to make money; ideally, EPS has remained positive over the past few years, and revenue is also growing. Third, the industry the company is in should have prospects, or at least dividends that are stable.

When selecting stocks, I generally use screening tools like Finviz or Investing to filter once based on basic conditions such as stock price and PE. But the real work comes afterward: digging deeper into the company’s fundamentals. I pay special attention to the PEG value, which is the price-earnings-to-growth ratio. If PEG is less than 1, it indicates the stock price hasn’t caught up with the company’s growth rate; stocks like this are often undervalued.

Recently, I focused on several US stocks. ADMA Biologics made a particularly strong impression on me. This biotech company’s flagship product, ASCENIV, grew at a rate of over 50% last year, with revenue reaching more than $500 million, and it’s expected to continue growing rapidly this year. Its current PE is only a bit above 15, and its forward PE is just 9.5. Analysts are generally optimistic, and the target price ranges from $23 to $32.

Another one is ANGI Inc., a home services platform. Although its revenue declined a bit last year, its profits have improved. The key is that their owned-and-operated distribution channels are growing quickly, and the results of their transformation are starting to show. The current share price is only $6.89, with a PE under 7.4, meaning the valuation is at a historical low. The average analyst target price is $15.33, implying more than 120% upside.

There are also plenty of opportunities in the Taiwan stock market. Chroma is a small- to mid-sized display panel manufacturer. Although it was still losing money last year, they have been adjusting their product mix—shifting toward higher-margin areas such as industrial control and automotive. If panel pricing can hold steady this year, the company has a chance to gradually turn losses into profits. JuHeng is a steel processing company. Recently, its revenue growth has been especially strong; from January to February, year-over-year growth exceeded 60%. As long as the steel industry recovers, profits can expand quickly.

When it comes to investment strategy, I recommend diversifying risk. The biggest fear when buying low-priced stocks is betting on just one or two. I suggest having at least 5 stocks in the portfolio. Using limit orders can reduce costs, and if you have time, setting up periodic investments (dollar-cost averaging) helps spread risk. Some people also use derivatives such as CFD to capture short-term opportunities, but that carries even higher risk, so you should be particularly cautious.

Overall, there are many low-priced stocks with strong potential in 2026, but the core of stock picking is still to find companies with cheap valuations, solid fundamentals, and good industry prospects. Don’t chase trends blindly—doing your homework is the way to go.