In this piece, we discuss the 10 Undervalued Wide Moat Stocks to Buy Right Now.
As U.S. markets go further into 2026, they are witnessing a shift in the macro backdrop that is reshaping expectations across asset classes. Following a sluggish 2025, U.S. small-cap stocks are expected to attract strong investor attention, as earnings momentum grows and interest-rate pressure eases.
“The big difference going into 2026 is that we finally are seeing earnings growth come back into small caps,” said Oren Shiran, portfolio manager at Lazard Asset Management, while speaking with Reuters on January 5, 2026.
Looking ahead, analysts expect two 25-basis-point Federal Reserve rate cuts this year. Lower borrowing costs are projected to benefit small-cap companies that carry high debt levels. According to Jefferies’ Steven DeSanctis, the Russell 2000 will jump to 2,825 by the end of 2026, which translates to a roughly 14% gain from 2025 levels.
Meanwhile, an outlook marked by falling rates and a softer U.S. dollar is shaping cross-asset opportunities. With gold extending its historic rally in 2025, JPMorgan and Bank of America forecast prices to go beyond $5,000 per ounce, driven by central bank diversification away from the dollar.
Sector-wise, analysts view healthcare and financials as key beneficiaries of policy tailwinds, M&A activity, and AI-related efficiency gains. In particular, Morgan Stanley projects the banking segment to outperform this year.
Therefore, investors are searching for areas with improving fundamentals, strong balance sheets, and durable competitive positioning. The backdrop demands a selective search for undervalued wide moat stocks, which we will now turn our attention to.
A man in a black suit holding a tablet looks at stock market data on a monitor. Photo by Tima Miroshnichenko on Pexels
Our Methodology
Using the VanEck Morningstar Wide Moat ETF, we extracted a list of wide moat stocks, filtering out stocks with the lowest forward price-to-earnings (P/E) multiple as of January 19, 2026. These stocks are trading at least 25% below the S&P 500’s January 16, 2026, forward P/E of 22.34. We also considered hedge fund sentiment for these stocks using Insider Monkey’s database, which tracks 978 stocks as of Q3 2025. Finally, we ranked the list in ascending order by the number of hedge funds holding a stake in each stock.
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. Zimmer Biomet Holdings, Inc. (NYSE:ZBH)
Forward Price-to-Earnings: 10.27x
Number of Hedge Fund Holders: 35
Zimmer Biomet Holdings, Inc. (NYSE:ZBH) is included on our list of the best undervalued wide moat stocks.
On January 13, 2026, Zimmer Biomet Holdings, Inc. (NYSE:ZBH) laid out cautious expectations for 2026 at the 44th Annual J.P. Morgan Healthcare Conference, according to The Fly. While we don’t have specific details at this time, the company said its guidance will reflect the scale of the internal changes it has planned for 2026.
This caution follows the November 2025 guidance revision, where management lowered the upper end of its 2025 organic revenue growth forecast to 4.00% from 4.50% due to weaker demand in Latin America and emerging European markets. However, overall revenue growth estimates were kept stable due to favorable currency impacts. Management highlighted last-minute cancellations of distributor orders from the Middle East and Eastern Europe as a key factor.
Previously, on January 9, 2026, Zimmer Biomet Holdings, Inc. (NYSE:ZBH) saw Bernstein raise its price target from $97.00 to $99.00, while reiterating its ‘Market Perform’ rating. The company noted improving clarity in macro and policy uncertainties for U.S. healthcare stocks.
On December 23, 2025, JPMorgan maintained its ‘Neutral’ rating on Zimmer Biomet Holdings, Inc. (NYSE:ZBH) with a $100 price target. The firm sees 2026 as a pivotal year presenting growth opportunities, while fundamentals remain in good shape.
Zimmer Biomet Holdings, Inc. (NYSE:ZBH) focuses on designing, manufacturing, and marketing orthopedic, spine, dental, and surgical products worldwide.
9. Huntington Bancshares Incorporated (NASDAQ:HBAN)
Forward Price-to-Earnings: 10.60x
Number of Hedge Fund Holders: 42
Huntington Bancshares Incorporated (NASDAQ:HBAN) is among the best undervalued wide moat stocks.
On January 12, 2026, Huntington Bancshares Incorporated (NASDAQ:HBAN) saw RBC Capital raise its price target from $20.00 to $21.00, while reiterating an ‘Outperform’ rating. The investment firm cited stable regional bank fundamentals, alongside a constructive outlook heading into Q4 earnings. Furthermore, the firm believes that strengthening loan and revenue growth remain key drivers, laying out a relatively stable outlook on the banking sector compared to the third quarter.
This optimism follows Huntington Bancshares Incorporated (NASDAQ:HBAN)’s January 6, 2026, announcement that Cadence Bank’s and its own shareholders have approved the merger. The development paves the way for the merger’s expected close on February 1, 2026, pending customary conditions. The company’s leadership expects the deal to expand capabilities and reach, helping more individuals and businesses while driving shareholder value. Meanwhile, Cadence CEO James D. Rollins III expressed confidence in the merger’s synergies, highlighting both banks’ relationship-focused philosophies and the opportunities the deal brings to customers across a broader footprint.
Huntington Bancshares Incorporated (NASDAQ:HBAN) offers full-service consumer and commercial banking, including deposits, lending, payments, and wealth management.
8. Masco Corporation (NYSE:MAS)
Forward Price-to-Earnings: 16.67x
Number of Hedge Fund Holders: 44
Masco Corporation (NYSE:MAS) is included on our list of the best undervalued wide moat stocks.
On January 14, 2026, Masco Corporation (NYSE:MAS) saw Wells Fargo analyst Sam Reid raise the firm’s price target from $75.00 to $78.00 and reiterate an ‘Overweight’ rating. With 2026 off to a volatile start ahead of quarterly results, the investment firm says homebuilders’ stocks look risky after the rally, and the outlook on building products remains mixed, though not compelling. Thus, the firm cautions investors not to chase the stock at current levels despite its constructive long-term view. The company plans to announce Q4 2025 results on February 10, 2026.
On the other hand, on January 9, 2026, RBC Capital analyst Mike Dahl reduced the firm’s price target on Masco Corporation (NYSE:MAS) from $69.00 to $67.00, while reiterating a ‘Sector Perform’ rating. Like Wells Fargo, RBC Capital’s stance remains cautious heading into 2026 amid challenging housing affordability. Seeing non-residential markets as mixed, the firm highlighted key risks, including policy changes, rates, and tariffs. Overall, the sector remains volatile, with homebuilders drawing the most cautious views. Meanwhile, the analyst favors the distribution segment and believes that building products OEMs offer relatively attractive valuations.
Masco Corporation (NYSE:MAS) focuses on designing, manufacturing, and distributing branded home improvement and building products.
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