In this article, we will discuss the 10 Best Upside Stocks to Buy According to Hedge Funds.
On June 22, Stephen Parker, JPMorgan Private Bank Co-Head of Global Investment Strategy, joined CNBC’s ‘Squawk Box’ to share his outlook on the current state of the market, which he believes is positioned for continued gains. He set a base case target for the S&P 500 at 7,800 by the end of the year, with a bull case target of 8,900. Parker noted that the rally seen throughout the year has been entirely earnings-driven and has consistently exceeded even the most bullish expectations. He expressed confidence that this earnings momentum will persist through year-end. While the base case target implies lower multiples from current levels, the bull case target of 8,900 is achievable if multiples remain constant while earnings growth continues as expected.
The primary driver of this market performance has been the earnings growth, particularly the boom in AI-related CapEx. Parker emphasized that for his bull case to manifest, the market needs to see a broadening of this growth. He pointed to expectations that 8 of the 11 sectors in the S&P 500 will deliver double-digit earnings growth. While he does not foresee a slowdown in the capex story, he noted that a major risk would be a shift away from fundamentals toward optimism, exuberance, or animal spirits. He clarified that he would become concerned if the market’s growth became driven more by rising multiples than by earnings results.
Our Methodology
We used screeners to identify stocks that have an upside potential of at least 40%, and limited our final selection to companies that have recently reported noteworthy developments likely to impact investor sentiment. These stocks are also popular among analysts and are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q1 2026.
Note: All data was sourced on June 22.
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. Insider Monkey’s quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 599.2% since May 2014, beating its benchmark by 372 percentage points (see more details here).
10 Best Upside Stocks to Buy According to Hedge Funds
10. Pegasystems Inc. (NASDAQ:PEGA)
Average Upside Potential: 100.28%
Number of Hedge Fund Holders: 41
Pegasystems Inc. (NASDAQ:PEGA) is one of the best upside stocks to buy according to hedge funds. On June 8, Pegasystems launched the Solution Designer Initiative to bridge the critical divide between business intent and technical execution. Building on the Pega Blueprint methodology, this program equips a new generation of practitioners with the skills to translate complex business goals into production-ready designs. By using Pega Blueprint AI, these professionals ensure that enterprise AI projects move from initial concepts to reliable, working software more efficiently.
The initiative supports practitioners of all levels through a comprehensive three-pillar framework. It provides free, skill-based credentials through Pega Academy, hands-on Blueprint Delivery workshops, and access to a global expert community. This approach emphasizes human expertise, ensuring that AI-driven transformation is guided by skilled leadership capable of aligning stakeholders and managing project outcomes from the first conversation.
This strategy aims to move organizations beyond mere AI experimentation toward sustainable, high-impact results. By integrating these trained designers with Pega’s new development environment, businesses can accelerate delivery cycles and improve software quality. Early adopters of this methodology have already reported substantial improvements, including faster discovery phases, reduced project rework, and quicker time-to-market for mission-critical applications.
Pegasystems Inc. (NASDAQ:PEGA) develops, markets, licenses, and supports software that enables organizations to deploy, build, and change enterprise applications.
9. AppFolio Inc. (NASDAQ:APPF)
Average Upside Potential: 56.71%
Number of Hedge Fund Holders: 43
AppFolio Inc. (NASDAQ:APPF) is one of the best upside stocks to buy according to hedge funds. On June 16, AppFolio expanded its Performance Platform by integrating advanced agentic AI across leasing, accounting, and resident operations. By adding a secure connector to Anthropic’s Claude, the platform enables operators to trigger complex workflows while maintaining strict data governance. This unified, AI-native architecture focuses on achieving measurable outcomes rather than just automating tasks.
New AI “Performers” now handle time-consuming back-office work, including automated invoice coding, book closing, and 24/7 multilingual leasing support. Additionally, the new Resident Concierge streamlines move-ins with complimentary utility setup. These tools are built directly into the platform, ensuring intelligent workflows operate seamlessly within daily property management.
These enhancements allow teams to reduce manual intervention and improve compliance, particularly for affordable housing portfolios. Early adopters are leveraging these capabilities to capture more after-hours leads, increase showing bookings, and resolve resident inquiries faster. By delegating routine operations to governed AI agents, property managers can focus on strategic growth.
AppFolio Inc. (NASDAQ:APPF) provides industry-specific cloud-based business software solutions, data analytics, and services for the real estate industry. Its offerings include AppFolio Property Manager and AppFolio Investment Management, along with services designed to automate, enhance, and streamline workflows and processes for property management businesses.
