In this article, we will look at the 10 Stocks Positioned for Breakout Growth.
US equity markets are back at record highs, with the S&P 500 topping 7,000, driven by a potential U.S.-Iran ceasefire, strong corporate earnings expectations, and renewed AI optimism. Investors poured $28 billion into U.S. equities as the U.S. moved closer to an agreement to end the Iran war.
After weeks of heightened volatility, stocks are breaking out on the prospects of peace in the Middle East. In addition, the bounce back comes amid investors taking advantage of discounted valuations following a deep correction from all-time highs.
The breakout looks set to continue, as strategists from some of Wall Street’s biggest banks remain upbeat on US earnings. According to JPMorgan strategists, the first quarter reporting season is proving reassuring, as Morgan Stanley insists that earnings-per-share growth is a sign of recovering profits.
“Despite geopolitical risks, the earnings recovery remains intact driven by the return of positive operating leverage,” Morgan Stanley’s Michael Wilson said in a note, as sales rise faster than costs, boosting profits.
Strategists at JPMorgan, led by Mislav Matejka, insist that short-term market volatility is unlikely to persist, as historical data show markets have been resilient to oil shocks. After previous surges in crude oil prices, the S&P 500 achieved positive returns over both the 6- and 12-month periods.
Amid renewed investor interest, breakout stocks are heavily concentrated in technology, industrials, and AI-driven sectors that were previously hurt by the Iran-US conflict. Smaller-cap growth companies are also on the move, as depicted by the Russell 2000 index, which has rallied by more than 11% over the past month.
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Our Methodology
To identify the top breakout stocks to invest in, we used the Finviz screener to find those that have breached the 200-day moving average. We settled on stocks breaking out above the 200-day moving average on high trading volume, which is more than twice the three-month average. We further refined the list by selecting stocks with a relative volume greater than 1, indicating heightened market activity and potential investor interest. We also settled on stocks with upside potential of more than 10% and that are popular among elite hedge funds in Q4 2025. Finally, we ranked the stocks based on their upside potential.
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 498.7% since May 2014, beating its benchmark by 303 percentage points (see more details here).
Stocks Positioned for Breakout Growth
10. The Sherwin-Williams Company (NYSE:SHW)
Stock Upside Potential: 11.08%
Number of Hedge Fund Holders: 83
The Sherwin-Williams Company (NYSE:SHW) is one of the stocks positioned for breakout growth. On March 17, Argus reiterated that The Sherwin-Williams Company (NYSE:SHW) is a Buy, impressed by the company’s leadership role in the manufacture, distribution, and sale of paint coatings and other related products. However, it cut its price target to $355 from $375.
According to the research firm, The Sherwin-Williams Company (NYSE:SHW) is well-positioned to benefit from higher demand trends, given its dominant market position. In addition, it expects the company to deliver significant margin expansion. Consequently, it views the company as a core long-term holding in the materials sector.
Early in the year, the company’s Chief Executive Officer, Heidi G. Petz, warned of a continuation of a softer, longer demand environment. The conditions are expected to persist into the second half of the year, based on customer sentiment and macroeconomic indicators. Nevertheless, the executive is confident the company can continue to outperform the market, given its differentiated strategy of providing innovative, productive solutions. For the first quarter, Sherwin-Williams expects sales to increase by mid-single-digit percentage. On April 1, Sherwin-Williams announced it will release its first-quarter results, ending March 31, before the market opens on April 28, 2026.
The Sherwin-Williams Company (NYSE:SHW) is a global leader in the manufacture, development, distribution, and sale of paints, coatings, and related products to professional, industrial, commercial, and retail customers.
9. Construction Partners Inc. (NASDAQ:ROAD)
Stock Upside Potential: 12.49%
Number of Hedge Fund Holders: 26
Construction Partners Inc. (NASDAQ:ROAD) is one of the stocks positioned for breakout growth. On April 1, Construction Partners Inc. (NASDAQ:ROAD) completed the acquisition of Four Star Paving. With the acquisition, the company gains access to a premier commercial paving contractor, expected to strengthen its prospects in road construction and maintenance.
Four Stars has carved a niche in asphalt paving and related construction services in Middle Tennessee, serving municipal, industrial, and commercial customers. The acquisitions should strengthen Construction Partners’ vertical integration of services, enhance capabilities, and scale. In addition, the company will be better equipped to participate in resulting construction projects and opportunities.
Construction Partners has been on an acquisition spree as it continues to expand its growth potential and presence in high-growth markets. In the first quarter, it completed two key acquisitions in Houston and Daytona Beach, Florida. It has also expanded in Houston with the acquisition of GMJ Paving, strengthening its presence in public infrastructure projects.
Construction Partners Inc. (NASDAQ:ROAD) is a vertically integrated, asphalt-centered infrastructure company that constructs and maintains transportation networks across the Sunbelt. It builds roads, highways, bridges, and airport runways for public and private clients, while operating its own asphalt plants, aggregate facilities, and liquid asphalt terminals.
8. Ecolab Inc. (NYSE:ECL)
Stock Upside Potential: 17.09%
Number of Hedge Fund Holders: 62
Ecolab Inc. (NYSE:ECL) is one of the stocks positioned for breakout growth. On March 30, Bloomberg reported that Citigroup has begun approaching other lenders to join a $4.8 billion financing backing Ecolab Inc.’s (NYSE:ECL) purchase of CoolIT Systems.
The proposed financing deal would involve the sale of investment-grade bonds. According to S&P Global Ratings, the issuance of investment-grade bonds is expected to push Ecolab’s debt levels higher in the short term but is unlikely to affect the credit metric in the long term.
Ecolab is pursuing an acquisition of CoolIT Systems to capitalize on surging demand for liquid cooling in artificial intelligence-driven data centers. CoolIT Systems has made a name for itself in the design and manufacture of liquid cooling systems used by hyperscale and colocation operators.
Ecolab also plans to use CoolIT Systems’ hardware and thermal engineering to complement its own strengths in water chemistry and digital monitoring. The acquisition is expected to generate about $550 million in sales over the next 12 months.
Ecolab Inc. (NYSE:ECL) is a global sustainability leader providing water, hygiene, and infection prevention solutions, services, and technologies to over 40 industries, including food, healthcare, hospitality, and industrial. They combine chemical products, on-site service teams, and digital technology to optimize water usage, enhance safety, and improve efficiency.
7. The Hershey Company (NYSE:HSY)
Stock Upside Potential: 18.88%
Number of Hedge Fund Holders: 49
The Hershey Company (NYSE:HSY) is one of the stocks positioned for breakout growth. On April 13, BTIG initiated coverage of The Hershey Company (NYSE:HSY) with a Neutral rating, impressed by the company’s cost and price dynamics. In addition, the research firm has touted the company’s operational leverage and international expansion.
Consequently, BTIG expects Hershey to deliver 2026 earnings 1% above consensus estimates. The research firm also expects the company’s 2027 earnings per share to come 3% above consensus estimates and 4% above estimates in 2028.
However, it maintains a cautious outlook, concerned by consumer headwinds and an uncertain volume trajectory. The research firm would have a more positive view of the stock if there were a significant uptick in consumer demand stability.
TD Cowen, on the other hand, maintains a Hold rating on the stock with a $210 price target. The research firm remains confident in the company’s outlook for management, presenting a case for 15% to 20% earnings-per-share growth.
The Hershey Company (NYSE:HSY) is a leading global confectionery manufacturer and the largest producer of chocolate in North America. It produces, markets, and sells chocolate, sweets, and snacks under 90+ brands—including Hershey’s, Reese’s, and Kit Kat.
6. Weyerhaeuser Company (NYSE:WY)
Stock Upside Potential: 22.61%
Number of Hedge Fund Holders: 35
Weyerhaeuser Company (NYSE:WY) is one of the stocks positioned for breakout growth. On March 30, DA Davidson reiterated a Buy rating on Weyerhaeuser Company (NYSE:WY) with a $31 price target. The bullish stance comes as the research firm expects the company to benefit from strong lumber demand and rising prices.
After years of capacity reductions and reduced Lumber imports, the lumber segment is experiencing seasonal demand improvements, and Weyerhaeuser is well-positioned to capitalize on them. Consequently, DA Davidson has raised its first-quarter EBITDA estimate for the company by 10% to $271 million. It is also significantly higher than consensus estimates of $251 million.
Despite broader housing concerns, DA Davidson remains optimistic about lumber price improvements it can capitalize on. Weyerhaeuser expects its first-quarter earnings to be $75 million higher than the fourth quarter and its adjusted EBITDA to be $90 million higher than the fourth quarter. Full-year adjusted EBITDA is expected to be approximately $425 million.
Weyerhaeuser Company (NYSE:WY) is one of the world’s largest private owners of timberlands, focusing on sustainably growing and harvesting trees, manufacturing wood products (lumber, panels, engineered wood), and managing real estate and natural resources. Founded in 1900, the company operates primarily in the US and Canada.
While we acknowledge the potential of WY to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than WY and that has 100x upside potential, check out our report about the cheapest AI stock.
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