3 Cheap Stocks Worth Buying Amid Market Volatility
Published October 20, 2025 • Reading time ~7–9 min
Market Volatility Returns
Volatility has returned as risks stack up—from a potential government shutdown and sticky inflation to valuation and geopolitical concerns. The VIX has recently traded back above 20, even spiking toward 28 this week. Yet beneath the surface, a subtle rotation is underway: profits from high-fliers are rotating into underperforming, value-rich sectors that could have meaningful catch-up potential.
Stock #1 — Uber Technologies (UBER)
Uber has crossed the profitability threshold with operating margins trending toward 10% and free cash flow expanding. Gross bookings continue to rise across mobility, delivery, and freight—signaling durable platform effects.
Pros
- Positive operating income and FCF momentum
- Multi-vertical flywheel (Mobility + Delivery + Freight)
- Reasonable PEG (~1.1) vs. growth outlook
Watchouts
- Regulatory & competitive risk (incl. robo-taxis)
- Macro sensitivity during risk-off regimes
Stock #2 — Sprouts Farmers Market (SFM)
Pullback tied to consumer softness may offer entry. Revenues and margins are at record highs, with operating and free cash flow also near peaks. Versus larger peers, SFM’s profitability trend stands out.
Pros
- Record revenue and margin profile (7.6% op margin)
- Cash flow strength supports reinvestment & resilience
- Valuation normalizing toward mid‑teens forward P/E
Watchouts
- Consumer spending & savings‑rate pressure
- Category competition (price perception vs. mass grocers)
Stock #3 — Eli Lilly (LLY)
Lilly’s revenue and margins are at record highs. Elevated CapEx (from ~$1.8B in 2022 to ~$6.1B TTM) reflects capacity build‑out for future launches. EV/EBITDA sits below its 5‑yr average—offering a better balance of growth vs. price after the sector’s underperformance.
Pros
- Category leadership in GLP‑1 with expanding indications
- Record 32%+ operating margin; robust top‑line trajectory
- PEG < 1 suggests growth underappreciation
Watchouts
- Pricing policy & reimbursement headwinds
- Pipeline execution and manufacturing scale‑up risks
Quick Compare — Valuation & Growth
| Company | Sector | Forward P/E | Growth (2‑yr EPS CAGR) | PEG | Street 12‑mo Upside |
|---|---|---|---|---|---|
| Uber (UBER) | Mobility / Industrial | ~26× (’26) | ~23% | ~1.1 | ~+20% |
| Sprouts (SFM) | Consumer Staples | 19.7× → 18.3× (’26) | ~14% | ~1.27 | ~+50% |
| Eli Lilly (LLY) | Healthcare / Pharma | 28.9× → 26.4× (’26) | ~27% | < 1 | ~+20% |
How to use this: Buy in tiers on red days, or use cash‑secured puts to set your preferred entry while earning income.
Read the disclaimerPlaybook for a Volatile Tape
- Stick to cash‑flow momentum over story‑only names.
- Scale entries (e.g., 1/3 positions) to manage timing risk.
- Favor PEG ≤ 1.5 when paying for growth.
- Consider options for income and disciplined entries.
- Journal your thesis and set review checkpoints.
Disclaimer
This content is for educational purposes only and is not financial advice. Investing involves risk, including loss of principal. Do your own research and consider consulting a licensed adviser before investing. Options involve risk and are not suitable for all investors.
Market Volatility Returns
After several months of relative calm, volatility has returned to the stock market. The laundry list of headwinds keeps growing — from the risk of a government shutdown to persistent inflation, valuation concerns, and ongoing geopolitical tensions. The CBOE Volatility Index (VIX) recently surged back above 20, even touching 28 this week — a clear reminder that investors are once again bracing for turbulence.
But amid the noise, something interesting is happening beneath the surface: a sector rotation.
Investors are beginning to take profits from high-flying retail and tech names and reallocating capital toward undervalued, lagging sectors that have significant catch-up potential.
While there aren’t as many “cheap” stocks as there once were, value opportunities still exist for disciplined investors who focus on fundamentals rather than headlines.
In this post, we’ll look at three stocks that appear undervalued, with solid growth prospects and improving fundamentals. We’ll also touch on a few option strategies that can help generate income or build positions conservatively in today’s volatile market.
Stock #1: Uber Technologies (NYSE: UBER)
Uber has evolved from a disruptive startup into a global platform with three distinct revenue drivers — mobility (ride-sharing), delivery, and freight. Despite short-term competition concerns around robo-taxis, Uber remains a leading player in urban transportation.
Recent Performance
- Market Cap: $24 billion
- 12-Month Return: +15%
- Year-to-Date Return: +46%
Uber was among the best performing S&P 500 names earlier this year, reflecting investors’ confidence in its turnaround story. More importantly, the company has transitioned to positive operating income and free cash flow — a crucial inflection point for growth firms.
Financial Snapshot
Using Fiscal AI data, Uber’s revenues and margins continue to climb. The company is now operating profitably, approaching a 10% operating margin, while both operating and free cash flow are trending sharply higher.
Gross bookings — a measure of total ride, delivery, and freight activity — also remain on a steady uptrend, underscoring user growth and platform stickiness.
Valuation
Uber’s valuation appears compelling:
- Average historical P/E: 33.4×
- Current P/E: 29×
- 2026 Forward P/E: ~26×
- Expected EPS Growth (2026-2027): ~23% CAGR
- PEG Ratio: ~1.1
Analysts have an average price target of $111, implying 20% upside from current levels.
Option Play (Conservative Entry)
If you’re cautious about near-term volatility, you can use a cash-secured put strategy to earn income while waiting for a better entry point.
- Sell the $85 put (Nov 21 expiration) → Earn ~$225 in premium
- Sell the $80 put → Earn ~$115 per contract
If Uber dips to those levels, you’ll effectively buy the stock at a discount while collecting premium income.
Stock #2: Sprouts Farmers Market (NASDAQ: SFM)
Sprouts Farmers Market is a specialty grocer focused on fresh, organic, and natural foods — appealing to health-conscious and higher-income consumers. While not as large as giants like Kroger or Albertsons, Sprouts’ model emphasizes local farm-to-table experience and strong customer loyalty.
Recent Performance
- Market Cap: $10 billion
- 12-Month Return: −4%
- Year-to-Date: −16%
After rallying 30% earlier this year, the stock has cooled off as consumer spending slows and personal savings rates decline. However, for long-term investors, that pullback may represent an attractive entry point.
Financial Highlights
- Revenue (TTM): $8.4 billion — a record high
- Operating Margin: 7.6% — also a record
- Operating & Free Cash Flow: both at all-time highs
Compared with competitors, Sprouts’ margins and profitability growth outshine peers like Kroger and Albertsons.
Valuation
- Forward P/E: 19.7×
- 2026 Forward P/E: 18.3×
- Expected EPS Growth (Next Year): 14%
- PEG Ratio: 1.27
Wall Street remains bullish, with an average 12-month target of $175, suggesting over 50% upside.
Option Strategy
To enter conservatively:
- Sell the $95 cash-secured put (Nov 21 expiration) → Collect ~$200 per contract
If exercised, you’d own shares at an effective forward P/E near 15.5× — a great valuation for a stable grocery chain with consistent cash flow.
Stock #3: Eli Lilly & Co. (NYSE: LLY)
Eli Lilly is a biopharmaceutical giant leading the way in the GLP-1 drug market for diabetes and weight loss — an area of massive long-term growth. Despite temporary headwinds from pricing and policy concerns, the company’s fundamentals remain strong, and its pipeline diversification positions it for sustainable success.
Recent Performance
- Market Cap: $757 billion
- 12-Month Return: −13%
- Year-to-Date: +3%
The stock has been volatile, swinging from +20% earlier in the year to flat today. Still, the broader healthcare sector’s underperformance provides opportunities for patient investors.
Financial Overview
- Revenue (TTM): $53.3 billion — record high
- Operating Margin: 32.4% — record high
- CapEx: Rising from $1.8B in 2022 → $6.1B TTM (investing in pipeline expansion)
While higher capital expenditures temporarily pressure free cash flow, Lilly is building capacity for future growth — exactly what investors should want from a long-term compounder.
Valuation
- Forward P/E: 28.9×
- 2026 Forward P/E: 26.4×
- EV/EBITDA: 41.6× vs 5-Year Avg. 50×
- Expected EPS Growth (Next 2 Years): 27% CAGR
- PEG Ratio: <1
Analysts maintain a $947 price target, implying ~20% upside from current levels.
While options on LLY are expensive due to the high share price, long-term investors can view current dips as accumulation opportunities in a blue-chip growth name.
Key Takeaways
| Company | Sector | Forward P/E | EPS Growth (Next 2 Years) | PEG Ratio | Upside Potential |
|---|---|---|---|---|---|
| Uber Technologies (UBER) | Industrial / Mobility | 26× | 23% | 1.1 | +20% |
| Sprouts Farmers Market (SFM) | Consumer Staples | 18× | 14% | 1.27 | +50% |
| Eli Lilly (LLY) | Healthcare | 26× | 27% | <1 | +20% |
- Market volatility often creates opportunity.
- Rotation into undervalued sectors could fuel the next leg of returns.
- Using options allows investors to earn income and manage risk while waiting for ideal entry points.
Final Thoughts
In times of rising volatility, facts and fundamentals matter more than ever.
Investors should avoid chasing hype and instead focus on companies with:
- Strong and improving cash flows
- Reasonable valuations relative to growth
- Proven business models in essential sectors
Uber, Sprouts Farmers Market, and Eli Lilly each fit that mold — offering a mix of growth, stability, and upside even in a choppy market.
Disclaimer
This article is for educational purposes only and should not be considered financial advice. Always do your own research or consult a licensed financial adviser before making investment decisions.
Volatility is back — but so are opportunities. In this episode, we dive into three undervalued stocks that could deliver strong returns: Uber, Sprouts Farmers Market, and Eli Lilly. Plus, we explore smart option plays to generate income and manage risk in a choppy market.
finance, investing, stock market, volatility, Uber stock, Eli Lilly stock, Sprouts Farmers Market, cheap stocks, value investing, PEG ratio, option trading, fiscal AI, market analysis, PyUncut
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