On January 6, Dan Greenhaus of Solus Alternative Asset Management, Cameron Dawson of NewEdge Wealth, and Sonali Basak of iCapital appeared on CNBC’s ‘Closing Bell’ to discuss what investors should be watching. Talking about a fourth consecutive strong year, Greenhaus expressed a positive outlook and cited several macro tailwinds: strong earnings growth, the intact AI story, and a Fed that is becoming accommodative rather than restrictive. He specifically mentioned the continuation of reserve purchases as a driver for the market’s immediate future.

The market ended the previous year with a whimper instead of reaching the 7,000 level that Greenhaus had anticipated. Greenhaus explained that an AI rotation story hampered some large-cap names, creating downward pressure. While banks and healthcare picked up some of the slack, he believes that the math of that rotation held the market back more than expected. Despite this, he reiterated that the underlying tailwinds matter more than the specific closing figures of the year-end rally.

Basak offered a more measured perspective and predicted mid-to-high single-digit returns. While the backdrop is positive, she expects a choppy year. She attributed the weakness at the end of last year to selectivity in the AI theme and rate sensitivity, and noted that the 10-year yield is up a quarter of a percentage point from its October lows. Basak warned of upside risk to longer-term yields regardless of potential rate cuts.

Dawson concluded the segment by discussing her fair value range of 7,200 to 7,400. She suggested that a lower-return year implied that valuations would stay flat, leaving earnings growth as the primary driver for gains; a repeat of the 2025 trend, where the market started and ended at 22x earnings. However, she highlighted a high bar for 2026: unlike 2025, where estimates were being cut, analysts have been raising estimates for the last 6 months. With earnings currently sitting at $310 a share and a projected 15% growth rate, she cautioned that there is little room for volatility or multiple expansion.

That being said, we’re here with a list of the 10 oversold stocks to buy now.

Our Methodology

We sifted through the Finviz stock screener to compile a list of oversold stocks that have declined by at least 30% over the past three months but for which analysts see potential to recover. 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 their 6-month performance. We have also added the hedge fund sentiment for each stock, as of Q3 2025.

Note: All data was sourced on January 7. 

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 Oversold Stocks to Buy Now

10. Life360 Inc. (NASDAQ:LIF)

3-Month Decline as of January 7: 39.24%

Average Upside Potential as of January 7: 50.29%

Number of Hedge Fund Holders: 17

Life360 Inc. (NASDAQ:LIF) is one of the oversold stocks to buy now. On January 5, Citizens downgraded Life360 to Market Perform from Outperform, but without setting a price target on the shares. The firm expressed growing skepticism regarding Life360’s 2026 growth catalysts as the company’s core expansion recently decelerated. Citizens pointed out that Life360 faces difficult year-over-year comparisons after its successful 2025 US advertising campaign, while further domestic price increases appear unlikely until a significant new feature update is launched.

Additionally, on the same day, Life360 announced two major milestones: the completion of its $120 million acquisition of Nativo and surpassing 50 million Monthly Active Users/MAU in the US. The purchase of Nativo, which is a leader in advertising tech, was finalized through a deal comprised of 65% cash and 35% stock. This strategic move allows Life360 to integrate Nativo’s premium publisher network and ad tech into its own ecosystem, effectively creating a massive first-party platform designed to help brands reach families across the Life360 app, Connected TV, mobile, and other digital environments.

Earlier on December 11, DA Davidson initiated coverage of Life360 with a Buy rating and $94 price target. The firm believes that Life360 Inc. (NASDAQ:LIF) is on the cusp of establishing broader awareness in several underpenetrated global markets, which is expected to spark international growth in MAU. The firm also noted that ongoing advertising efforts, coupled with the introduction of pet GPS subscriptions, are likely to generate higher-margin revenue streams for the company.

Life360 Inc. (NASDAQ:LIF) operates a technology platform to locate people, pets, and things in North America, Europe, the Middle East, Africa, and internationally.

9. Gambling.com Group Limited (NASDAQ:GAMB)

3-Month Decline as of January 7: 32.81%

Average Upside Potential as of January 7: 57.75%

Number of Hedge Fund Holders: 18

Gambling.com Group Limited (NASDAQ:GAMB) is one of the oversold stocks to buy now. On December 30, Freedom Capital analyst Egor Tolmachev initiated coverage of Gambling.com with a Buy rating and $8.50 price target. Gambling.com is recognized as a premier performance marketing and sports data provider within the online gambling sector. According to the firm, the company’s shares represent a capital-light, pure-play opportunity for investors to gain exposure to the rapid, state-by-state legalization of the US market.

In Q3 2025, Gambling.com Group Limited (NASDAQ:GAMB) highlighted a 21% year-over-year revenue increase to $39 million. This growth was fueled by the company’s sports data services, which saw revenue quadruple to $9.2 million. The segment now accounts for 25% of total 2025 revenue, driven by the strong performance of enterprise solutions like OpticOdds and consumer platforms such as OddsJam and RotoWire.

Despite the top-line success, the group faced significant headwinds in its marketing division, which remained flat year-over-year due to unfavorable search ranking dynamics and poor organic search quality. Consequently, the company revised its full-year 2025 guidance downward to ~$165 million in revenue.

Gambling.com Group Limited (NASDAQ:GAMB) operates as a performance marketing company for the online gambling industry in North America, the UK, Ireland, rest of Europe, and internationally.