On January 7, Jay Woods, Chief Market Strategist at Freedom Capital Markets, joined CNBC to state that stocks are broadening beyond tech, with materials, defense, transports, and airlines showing breakouts and strong setups heading into the year. Woods characterized the start of 2026 as ‘very’ bullish due to a notable broadening of the market with increased upside participation, though technology (specifically software) is identified as a laggard. Woods analyzes 3 specific sectors from the first 3 days of the year, identifying 2 that successfully achieved breakouts and one that ultimately resulted in a fake out.

The energy sector is identified as the fake out. Despite monumental openings on Monday from energy companies, the stocks hit levels of resistance and pulled back. The speaker advised waiting for price confirmation before investing in energy. Conversely, the materials sector is highlighted as a breakout from a year-long base with room to run, supported by silver, gold, and packaging stocks. The defense sector is also noted for a major breakout.

Additionally, on December 23, Julie Biel, chief market strategist at Kayne Anderson Rudnick, joined CNBC’s ‘Fast Money’ to discuss what investors can expect from small-cap stocks in 2026. Given the performance of the Russell 2000, which then-recently hit all-time highs and was pacing for its eighth consecutive month of gains, Biel described the backdrop for small caps as positive and noted that these companies are economically sensitive and benefit from lower interest rates because they typically borrow on a variable interest rate market. However, she noted that the last 18 months had been confusing for active long managers, as only about one percent are beating their benchmarks. Biel explained that while she expected quality companies with strong earnings to lead, the market had instead seen outperformance from the lowest quality segments, such as biotech and quantum companies with no earnings. Despite this ‘bridesmaid’ status for quality small-cap stocks, Biel argued that the long-term setup for earnings growth in 2026 is more favorable for small caps than for mid-cap, large-cap, or even the MAG7 stocks.

That being said, we’re here with a list of the 10 promising stocks to buy under $50.

Our Methodology

We sifted through the Finviz stock screener to compile a list of promising stocks that had a high upside potential of over 40% and had a share price under $50. 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 January 9. 

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 Promising Stocks to Buy Under $50

10. Acadia Healthcare Company Inc. (NASDAQ:ACHC)

Share Price as of January 9: $13.67

Average Upside Potential as of January 9: 42.54%

Number of Hedge Fund Holders: 40

Acadia Healthcare Company Inc. (NASDAQ:ACHC) is one of the promising stocks to buy under $50. On December 18, Mizuho lowered the firm’s price target on Acadia Healthcare to $17 from $22 and kept a Neutral rating on the shares. In its 2026 outlook for managed care and health facilities, Mizuho identified the coming year as pivotal for the industry. Mizuho suggested that the sector is emerging from a 3-year downturn in underwriting, with margins across Commercial, Medicaid, and Medicare expected to recover over the next several years. Consequently, the firm holds a positive stance on managed care entering 2026.

Earlier on December 4, Barclays analyst Andrew Mok reduced the price target for Acadia Healthcare to $14 from $17, while maintaining an Equal Weight rating. This adjustment followed the company’s third guidance cut of the year, which was prompted by a surprise $49 million surge in legal costs.

A day before that, RBC Capital adjusted its price target for Acadia Healthcare downward to $19 from $22, while sticking with an Outperform rating. The firm expressed disappointment following yet another reduction in the company’s financial guidance, which was triggered by Acadia Healthcare Company Inc. (NASDAQ:ACHC) underestimating its 2025 professional and general liability expenses. The firm noted that management expects these liability costs to remain high through 2026.

Acadia Healthcare Company Inc. (NASDAQ:ACHC) provides behavioral healthcare services in the US and Puerto Rico.

9. Cipher Mining Inc. (NASDAQ:CIFR)

Share Price as of January 9: $16.90

Average Upside Potential as of January 9: 62.21%

Number of Hedge Fund Holders: 40

Cipher Mining Inc. (NASDAQ:CIFR) is one of the promising stocks to buy under $50. On December 23, Cipher Mining announced the acquisition of a new 200-megawatt/MW site in Ohio, named Ulysses. This acquisition represents a significant milestone for the company, as this is its first site located outside of Texas. The move highlights Cipher’s strategy to diversify its geographical footprint and source high-quality infrastructure opportunities across the US.

The Ulysses site encompasses 195 acres of land and includes secured power capacity from AEP Ohio. All necessary utility agreements and interconnection approvals are already in place, allowing the facility to participate in the PJM market, which is the largest wholesale electricity market in the country. The project is currently on track to be energized in Q4 2027.

Cipher Mining Inc. (NASDAQ:CIFR) identified the location as being uniquely suited for HPC applications. The site’s expansive acreage, combined with the availability of diverse fiber paths and its proximity to a major metropolitan area, drives its suitability. With the addition of the Ulysses project, Cipher Mining’s total development pipeline has grown to 3.4 gigawatts/GW across 8 different sites.

Cipher Mining Inc. (NASDAQ:CIFR), together with its subsidiaries, develops and operates industrial-scale data centers in the US.