10 Best Upside Stocks to Buy According to Hedge Funds

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.

8. Paylocity Holding Corporation (NASDAQ:PCTY)

Average Upside Potential: 47.55%

Number of Hedge Fund Holders: 44

Paylocity Holding Corporation (NASDAQ:PCTY) is one of the best upside stocks to buy according to hedge funds. On May 7, Paylocity reported strong FQ3 2026 results, with total revenue reaching $502.3 million, a 10.5% increase year-over-year. Recurring revenue grew 11.6% to $469.9 million, while GAAP net income rose to $111.3 million. Driven by these solid financials and consistent cash flow generation, the company raised its full-year guidance for both revenue and profitability.

The company is actively scaling its AI-driven HCM, Finance, and IT solutions, highlighted by the April 2026 acquisition of Grayscale Labs to support its recruiting automation capabilities. Paylocity also continues to prioritize shareholder returns, repurchasing $350 million in shares during the first nine months of the fiscal year and authorizing an additional $1 billion for future share repurchases.

Looking ahead, Paylocity projects steady growth for the remainder of fiscal year 2026, with total annual revenue expected to reach up to $1.76 billion. The company’s continued investment in R&D and strategic acquisitions remains central to its long-term strategy, ensuring its platform remains competitive by leveraging core employee data and expanded AI functionality.

Paylocity Holding Corporation (NASDAQ:PCTY) is a US provider of cloud‑based payroll and human capital management/HCM software, offering unified HR, payroll, talent, time, benefits, and spend management solutions to help mid‑market organizations streamline workforce operations.

7. AECOM (NYSE:ACM)

Average Upside Potential: 48.12%

Number of Hedge Fund Holders: 49

AECOM (NYSE:ACM) is one of the best upside stocks to buy according to hedge funds. On June 22, AECOM was appointed to the UK Government Commercial Agency’s $4.7 billion Construction Professional Services 2/CPS2 framework. This 4-year agreement serves as a primary procurement route for public sector projects, including social infrastructure, energy, and defense. Having been a participant in the original 2021 iteration, AECOM significantly expanded its role by securing positions on nine framework lots, up from five in the previous version.

The new appointment allows AECOM to provide multidisciplinary technical and professional services across a wider range of sectors. Notably, the firm has gained access to newly established lots covering nuclear energy & flood risk, and asset management. These additions complement their existing commitments in general infrastructure, project management, and defense, positioning the company to support central government departments and local authorities on both standalone projects and long-term capital programs.

This expanded partnership underscores AECOM’s growth within the UK public sector market. By embedding wide-ranging expertise into the GCA’s newly integrated procurement structure, the firm aims to address pressing infrastructure challenges while delivering sustained value for taxpayers. The appointment solidifies AECOM’s (NYSE:ACM) role as a trusted partner in navigating the UK’s evolving built environment and large-scale public investment goals.

AECOM (NYSE:ACM) delivers expert infrastructure consulting services to commercial and government organizations. Its services portfolio includes advising and consultation, engineering solutions, construction, and management services. It provides these services to various segments, including transportation, water, energy, and more. It is also involved in developing and investing in real estate ventures.

6. Cognizant Technology Solutions Corporation (NASDAQ:CTSH)

Average Upside Potential: 69.35%

Number of Hedge Fund Holders: 50

Cognizant Technology Solutions Corporation (NASDAQ:CTSH) is one of the best upside stocks to buy according to hedge funds. On June 16, Cognizant and Rubrik (RBRK) expanded their alliance to help enterprises safely deploy autonomous AI at scale. As a launch partner for Rubrik Agent Cloud, Cognizant will integrate this solution as a governance layer within its Neuro AI and AI Factory platforms. This collaboration aims to address the critical need for oversight as AI agents increasingly handle sensitive tasks like writing code and managing data across enterprise systems.

The integration provides organizations with essential tools to manage agent behavior, including real-time policy enforcement, visibility into agent actions, and the ability to reverse unintended operations. By embedding these controls, Cognizant intends to give clients the confidence to transition AI agents from pilot programs into production environments, particularly within highly regulated industries such as healthcare, life sciences, and financial services.

These governance features ensure that all agent activity is recorded and held within defined guardrails, aligning with standards like the NIST AI Risk Management Framework. By enabling enterprises to track, scope, and roll back agent-initiated changes, the partnership offers a resilient approach to AI-driven IT operations. This enables companies to accelerate their AI adoption while maintaining full operational control and auditability over their automated workflows.

Cognizant Technology Solutions Corporation (NASDAQ:CTSH) provides information technology, consulting, and business process outsourcing services. The company’s services include AI, application services, business process services, core modernization, and cloud solutions.

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