In this article, we will discuss the 10 Most Shorted Mid-Cap and Small-Cap Stocks to Buy Now.
Small cap and mid cap stocks have been on a roll in the first half of the year as investors rotate away from mega cap tech stocks. Strong earnings acceleration and easing financing costs have increasingly strengthened investor sentiment in the stocks.
Attractive valuations relative to mega-cap stocks, after years of underperformance, have also fueled demand for small- and mid-cap stocks, given their significant upside potential. Consequently, the Russell 2000 index is up by about 18%, nearly double the 9% gain for the S&P 500. The outperformance signals that the stock market rally is increasingly spreading beyond a handful of big companies, as has been the case in previous years.
Waning expectations of interest rate cuts amid soaring inflationary pressures from higher energy prices are one headwind that continues to curtail gains in mid- and small-cap stocks. Additionally, weaker profitability and heavier debt loads around some companies continue to force investors to trim exposure to small-cap stocks rather than add to them, according to Alex Sagal, investment-strategy analyst at Wells Fargo Investment Institute.
“While this may suggest a turning point in relative performance, we believe this recent momentum is masking weakness in underlying small-cap equity fundamentals,” Sagal wrote.
Nevertheless, the best mid and small-cap stocks are of companies with early-stage businesses that have room to expand in their niche. The stocks are expected to shrug off uncertainty around interest rate cuts and slowing economic growth to generate long-term value. With that in mind, let’s take a look at some of the best and most shorted mid-cap and small-cap stocks to buy now.
Our Methodology
To compile a list of the Most Shorted Mid-Cap and Small-Cap Stocks to Buy Now , we used Finviz and Yahoo stock screeners to identify stocks with significant short interest. From that list, we primarily chose stocks with a short float of 20% or above. We trimmed the list to mid- and small-cap stocks with market caps between $300 million and $10 billion. We further trimmed the list by focusing on stocks with upside potential of more than 20%. These equities were further narrowed down based on their popularity among elite hedge funds, as of Q1 2026. Finally the stocks are ranked based on their upside potential (as of June 2).
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research shows 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. Globant S.A. (NYSE: GLOB)
Short Float: 20.14%
Market Cap: $1.92 Billion
Stock Upside Potential: 22.24%
Number of hedge fund holders: 25
Globant S.A. (NYSE:GLOB) is one of the most shorted mid-cap and small-cap stocks to buy now. On May 19, Mizuho reiterated an Outperform rating on Globant S.A. (NYSE:GLOB) but lowered its price target to $59 from $76.
The price target cut is in stark contrast to the company delivering solid first-quarter results at the high end of its growth guidance, while also raising its low-end 2026 growth guidance. The strong quarterly results came in better than expected, despite soft demand amid weak macroeconomic conditions. Revenue in the quarter was down 0.7% year over year to $607.1 million as adjusted diluted earnings per share came in at $1.50. The company also generated $36.1 million in free cash flow.
According to Mizuho, Globant S.A.’s year-over-year organic constant currency growth bottomed in the fourth quarter of 2025. The research firm expects the company’s organic growth to accelerate throughout the year and inflect positively in the third quarter. Second quarter 2026 revenues are expected to be in the range of $610 million to $616 million, with Non-IFRS Adjusted Diluted EPS between $1.45 and $1.55.
Globant S.A. (NYSE:GLOB) is a digitally-native IT and software development company. It specializes in digital transformation, custom software engineering, and artificial intelligence integration to help global brands reinvent their customer experiences and internal operations.
9. Sarepta Therapeutics Inc (NASDAQ:SRPT)
Short Float: 24.72%
Market Cap: $1.86 Billion
Stock Upside Potential: 25.08%
Number of hedge fund holders: 41
Sarepta Therapeutics Inc. (NASDAQ:SRPT) is one of the most shorted mid-cap and small-cap stocks to buy now. On May 6, Sarepta Therapeutics Inc. (NASDAQ:SRPT) delivered impressive first-quarter results as it bounced back to profitability despite facing commercialization challenges with its flagship gene therapy, ELEVIDYS.
Total revenue in the quarter was $730.8 million, a decrease of $14.1 million from $744.9 million delivered in the same quarter last year. The decline was attributed to lower ELEVIDYS sales volume resulting from the updated label, which specifies treatment only for ambulatory patients. The decrease was partially offset by a $253 million increase in collaboration revenue.
Amid a slight revenue decline, Sarepta Therapeutics bounced back to profitability with non–GAAP net income of $385.4 million, or $3.16 a share, compared to a net loss of $332.5 million, or a loss of $3.42 a share, delivered the same quarter last year. Earnings beat analysts’ expectations of $0.99 a share on revenue of $731 million.
The bounce back to profitability was driven by disciplined cost management and a favorable revenue mix. In addition, the company delivered positive cash flow, with cash and investments totaling $748 million. Consequently, it remains well-positioned to fund its pipeline development without tapping the debt market.
Sarepta Therapeutics Inc (NASDAQ:SRPT) is a global biotechnology company that engineers precision genetic medicines to treat rare neuromuscular diseases, primarily Duchenne muscular dystrophy (DMD). They develop treatments using three main scientific platforms: gene therapy, RNA technologies, and gene editing.
