On December 10, Meghan Shue, Wilmington Trust chief investment strategist, appeared on CNBC’s ‘The Exchange’. Given the then-upcoming Fed meeting scheduled for that day, Shue thought that the Fed should cut interest rates (the Fed did cut interest rates by 25 basis points). Shue also stated that she believed there would be more cuts after that day, specifically three more cuts next year, which she noted is largely in line with market expectations. She then provided justification based on the Fed’s dual mandate. On the inflation side, she acknowledged that inflation is still above target but is decelerating slowly and getting there. She dismissed the underlying drivers of inflation, believing that they are not present, apart from tariffs, which she thinks the Fed has generally viewed as transitory and expected to pass through. Conversely, she argued that the labor market is still operating in a data fog. She asserted that a cut would make sense because there were signs of weakness in the job market, especially within smaller firms, highlighting a two-speed economy between large and small firms. She concluded that this weakness is worth hedging against.
Shue also expressed an optimistic outlook for next year, not foreseeing a top in the market anytime soon, but rather expecting more volatility around tech names and non-tech names. She still expects the bull market to continue. She projected that the first quarter may be a digestion phase, potentially involving rebalancing or other global issues like interest rates, which would act as a sort of reset before moving into a better, healthier next leg of the bull market.
Later on December 12, Chris Vermeulen, Founder & Chief Investment Officer of The Technical Traders, appeared on Schwab Network to suggest that growth stocks and small caps will lead the Santa Claus rally. Vermeulen noted that the MAG7 aren’t that magnificent anymore in terms of their price action. He stated that as a whole, the basket of these stocks has been struggling for the last couple of months. He contrasted this by mentioning that some stocks are hitting all-time highs while Nvidia is struggling. He emphasized that if the MAG7 stocks do not move higher, they will definitely hold the stock market down because the majority of other stocks are not hitting all-time highs. Vermeulen then identified a rotation of money away from the MAG7 into small caps and micro caps, such as the Russell 2000 or the micro-cap stocks themselves. He noted a very diverse mix now and attributed this to the holiday season sentiment, where people become bullish and excited about the markets. He pointed out that this is precisely what is currently being seen, with the MAG7, the NASDAQ, and the S&P 500 showing some signs of weakness, while money rotates into growth stocks and individual sectors.
That being said, we’re here with a list of the 10 best growth stocks to buy in 2026.
Our Methodology
We used the Finviz stock screener to find growth stocks with a 5-year EPS CAGR of at least 20% and a forward EPS diluted growth rate (1-year estimate) of at least 15%. We then selected 10 stocks that were the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q3 2025.
Note: All data was sourced on December 18.
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 427.7% since May 2014, beating its benchmark by 264 percentage points (see more details here).
10 Best Growth Stocks to Buy in 2026
10. Insulet Corporation (NASDAQ:PODD)
5-Year EPS CAGR: 51.00%
Forward EPS Diluted Growth (1-Year Estimate): 31.01%
Number of Hedge Fund Holders: 56
Insulet Corporation (NASDAQ:PODD) is one of the best growth stocks to buy in 2026. On December 18, Truist lowered the firm’s price target on Insulet to $390 from $412 with a Buy rating on the shares. This sentiment was posted as part of the firm’s broader research note that previewed 2026 for MedTech. Truist expressed a more positive outlook on the healthcare sector for 2026 due to increasingly attractive relative valuations. However, the firm cautioned that the sector might act as a source of funds rather than a primary destination for new capital. Consequently, Truist advised investors to prioritize companies with specific 2026 catalysts.
A day prior, on December 17, Canaccord raised the firm’s price target on Insulet to $450 from $432 with a Buy rating on the shares. This was announced as Canaccord reaffirmed its bullish stance on the MedTech sector for 2026. The firm’s positive outlook is built on several key pillars: consistent demand from an aging demographic, a heightened focus on acute healthcare requirements, a robust M&A environment, and a market increasingly open to new IPOs. The firm particularly highlighted Insulet as a top pick and asserted that the company is primed for a multi-year cycle of outperformance due to the recent label expansion and the commercial rollout of Automated Insulin Delivery systems to the Type 2 diabetes patient population.
Earlier on December 16, Evercore ISI initiated coverage of Insulet with an Outperform rating and $370 price target. Despite the arrival of new competitors, the firm believes that Insulet’s unique tubeless design is effectively revolutionizing the insulin pump market and fueling substantial growth.
Insulet Corporation (NASDAQ:PODD) develops, manufactures, and sells insulin delivery systems for people with insulin-dependent diabetes in the US and internationally.
9. Block Inc. (NYSE:XYZ)
5-Year EPS CAGR: 49.99%
Forward EPS Diluted Growth (1-Year Estimate): 21.99%
Number of Hedge Fund Holders: 64
Block Inc. (NYSE:XYZ) is one of the best growth stocks to buy in 2026. On December 16, Bank of America analyst Mihir Bhatia lowered the firm’s price target on Block to $86 from $88 and kept a Buy rating on the shares. This sentiment was announced after BofA adjusted estimates among the firm’s overall consumer finance coverage following pre-quiet period IR catchups.
Earlier on November 21, Morgan Stanley raised the firm’s price target on Block to $72 from $71 with an Equal Weight rating on the shares. The decision followed the company’s investor day, where it met anticipated gross profit targets through improvements in the Square and Cash App segments. While Morgan Stanley is now more optimistic about product developments and increased share buybacks, the firm continues to view Bitcoin and ecosystem integration as low-return investments.
In Q3 2025, Block highlighted an 18% year-over-year increase in gross profit to $2.66 billion. While the company missed analyst expectations for revenue by $196.93 million (totaling $6.11 billion) and adjusted EPS by $0.12 (totaling $0.54), it demonstrated strong operational momentum, particularly within the Cash App ecosystem. Cash App’s gross profit surged 24%, driven by increased user engagement and the scaling of high-margin financial services.
The Square segment reported a 9% increase in gross profit, supported by a 12% rise in Gross Payment Volume/GPV. Growth was particularly strong in international markets, which saw a 26% GPV increase, and among mid-market sellers, who now account for 45% of total GPV.
Block Inc. (NYSE:XYZ), together with its subsidiaries, builds ecosystems focused on commerce and financial products and services in the US and internationally. It operates through two segments: Square and Cash App.
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