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.
7. United Parcel Service, Inc. (NYSE:UPS)
Forward Price-to-Earnings: 14.56x
Number of Hedge Fund Holders: 55
United Parcel Service, Inc. (NYSE:UPS) is one of the best undervalued wide moat stocks.
On January 12, 2026, JPMorgan analyst Brian Ossenbeck raised the firm’s price target on United Parcel Service, Inc. (NYSE:UPS) from $97.00 to $99.00, while reiterating a ‘Neutral’ rating. The firm noted that overcapacity eased in the fourth quarter, thanks to industry enforcement actions. However, the firm says the recent share rally may not hold in the short term, with Q1 spot truckload rates expected to weaken seasonally. Accordingly, the firm expects investors to lock in gains, leading to a short-term pullback amid broader market uncertainty.
Meanwhile, on January 9, 2026, Bernstein analyst David Vernon upgraded United Parcel Service, Inc. (NYSE:UPS) to ‘Outperform’ with a $125.00 price target, describing dividend concerns as overblown.
The company’s shares declined roughly 20% in 2025, with the dividend yield reaching 6% and the payout ratio hitting roughly 98%. Still, Vernon remains confident, citing United Parcel Service, Inc. (NYSE:UPS)’s commitment to its dividend while reshaping operations to focus on higher-margin markets and reducing low-margin Amazon volume.
Meanwhile, analysts project EPS growth of 4% in 2026 and 11% in 2027, given that the execution goes as per the company’s strategic plan.
United Parcel Service, Inc. (NYSE:UPS) focuses on providing global package delivery and supply chain solutions across the U.S., international, and supply chain segments.
6. U.S. Bancorp (NYSE:USB)
Forward Price-to-Earnings: 11.10x
Number of Hedge Fund Holders: 56
U.S. Bancorp (NYSE:USB) is included on our list of the best undervalued wide moat stocks.
On January 13, 2026, U.S. Bancorp (NYSE:USB) announced that it will acquire Wall Street brokerage BTIG for up to $1 billion in cash and stock. With this move, the company marks a strategic expansion into capital markets.
In addition to $725 million upfront, the deal includes an additional $275 million contingent on performance over three years. BTIG has served as the bank’s equity capital markets referral partner since 2014, bringing strengths in investment banking, institutional sales and trading, research, and prime brokerage. The firm has helped U.S. Bancorp (NYSE:USB) diversify beyond traditional banking. The deal is expected to close in the second quarter of 2026.
Within this context, Piper Sandler analysts noted,
While U.S. Bancorp (NYSE:USB) certainly has capital markets capabilities, they have historically been much more limited than those of several peers. This transaction therefore rounds out USB’s offerings to become more competitive with those of other large banks.
On the same day, Keefe Bruyette spoke out on the recent development, viewing it as a modest positive for U.S. Bancorp (NYSE:USB). The firm noted the company’s strategy of gradually growing its internal capital markets capabilities amid rising industry-wide demand. The firm maintained its ‘Market Perform’ rating with a $58 price target.
U.S. Bancorp (NYSE:USB), founded in 1929 and headquartered in Minneapolis, offers comprehensive banking services, including lending, deposits, wealth management, mortgages, credit cards, and brokerage services across the U.S.
5. Amgen Inc. (NASDAQ:AMGN)
Forward Price-to-Earnings: 15.02x
Number of Hedge Fund Holders: 62
Amgen Inc. (NASDAQ:AMGN) is one of the best undervalued wide moat stocks.
On January 13, 2026, an announcement came regarding the Ro and Amgen Inc. (NASDAQ:AMGN) collaboration. Ro, a U.S. telehealth firm, alongside Amgen, aims to investigate barriers patients face in accessing obesity treatments, including GLP-1 drugs such as Novo Nordisk’s Ozempic and Eli Lilly’s Zepbound.
Leveraging data from Ro’s direct-to-consumer platform, both companies aim to assess insurance coverage and prior authorization requirements, identify caps, and improve patient access. The companies noted that GLP-1 therapies can be life-changing, with the broad impact depending on how access is scaled. Meanwhile, Amgen Inc. (NASDAQ:AMGN) aims to capitalize on the observational research, expecting the research to help with therapy development and bring innovations in care delivery. However, the financial terms were not disclosed.
A week earlier, Amgen Inc. (NASDAQ:AMGN) acquired Dark Blue Therapeutics for up to $840 million. Dark Blue is a UK-based biotech company that is advancing first-in-class small molecule protein degraders targeting MLLT1/3 proteins in acute myeloid leukemia (AML). Showing anti-cancer activity and differentiation from existing therapies, the preclinical data support potential single-agent and combination treatment strategies. As it prepares to integrate Dark Blue into its research organization, the company aims to bolster early oncology discovery and reinforce its commitment to novel therapeutic mechanisms.
Amgen Inc. (NASDAQ:AMGN), a biotechnology company, develops, manufactures, and markets human therapeutics. The company was founded in 1980 and is headquartered in Thousand Oaks, CA.
4. Kenvue Inc. (NYSE:KVUE)
Forward Price-to-Earnings: 15.60x
Number of Hedge Fund Holders: 73
Kenvue Inc. (NYSE:KVUE) is included on our list of the best undervalued wide moat stocks.
Kenvue Inc. (NYSE:KVUE) is looking to potentially reshape the consumer health landscape, as it received institutional support for its proposed merger with Kimberly-Clark. On January 16, 2026, Reuters reported that Institutional Shareholder Services (ISS), a proxy advisory firm, recommended that shareholders approve Kimberly-Clark’s $40 billion bid for Kenvue. The firm believes the merger could deliver positive synergies and advance strategic objectives, despite uncertainties surrounding ongoing talcum litigation and concerns regarding Tylenol’s active ingredient.
Meanwhile, Meridian Hedged Equity Fund discussed Kenvue Inc. (NYSE:KVUE) in its Q3 2025 investor letter, highlighting the market’s overreaction to the Tylenol safety concerns. The firm noted minimal revenue impact from pregnant women, no new scientific evidence, and largely dismissed litigation claims. In fact, the fund believes the company could unlock significant value if it reinvests in underfunded brands, optimizes costs, and improves margins.
Investor sentiment may stabilize ahead of the vote with the ISS endorsement. Kimberly-Clark’s share price is down 17% since the deal announcement, and Kenvue Inc. (NYSE:KVUE) is down 35% since the former consumer healthcare division of Johnson & Johnson was listed as a public company in 2023.
Kenvue Inc. (NYSE:KVUE) focuses on developing and selling consumer healthcare products, including Tylenol and Neutrogena. The company operates across Self Care, Skin Health, and Essential Health segments globally.
3. Bristol-Myers Squibb Company (NYSE:BMY)
Forward Price-to-Earnings: 9.13x
Number of Hedge Fund Holders: 76
Bristol-Myers Squibb Company (NYSE:BMY) is one of the best undervalued wide moat stocks.
On January 13, 2026, Leerink raised its price target on Bristol-Myers Squibb Company (NYSE:BMY) from $54.00 to $60.00, while reiterating an ‘Outperform’ rating. Highlighting ample pipeline optionality in 2026, the firm noted 12 registration data readouts across eight assets. Most of these assets represent potential new launches and are currently significantly discounted by the market. With this backdrop, the firm expects strong upside potential, especially if key trials deliver positive results.
The previous day, in line with Leerink’s positive outlook, Bristol-Myers Squibb Company (NYSE:BMY) reported positive topline results from SCOUT-HCM, a Phase 3 trial evaluating Camzyos (mavacamten) in adolescents with symptomatic obstructive hypertrophic cardiomyopathy (oHCM). Meeting its primary endpoint, the trial significantly reduced Valsalva left ventricular outflow tract (LVOT) gradient at Week 28 compared to placebo. At the same time, secondary endpoints were also met. Moreover, safety was ensured among adult patients, with no new signals observed. Looking ahead, management sees Camzyos becoming the first cardiac myosin inhibitor for adolescent patients.
Bristol-Myers Squibb Company (NYSE:BMY) focuses on discovering, developing, manufacturing, and marketing biopharmaceuticals, including small molecules, biologics, and CAR-T therapies.
2. Adobe Inc. (NASDAQ:ADBE)
Forward Price-to-Earnings: 12.58x
Number of Hedge Fund Holders: 88
Adobe Inc. (NASDAQ:ADBE) is included on our list of the best undervalued wide moat stocks.
Amid intensifying competition pressures across its core creative markets, analyst sentiment surrounding Adobe Inc. (NASDAQ:ADBE) remains cautious. On January 14, 2026, Baird reduced its price target on the stock from $410.00 to $350.00, while reiterating a ‘Neutral’ rating.
The cautious sentiment was reinforced on January 9, 2026, when BMO Capital downgraded Adobe Inc. (NASDAQ:ADBE) from ‘Outperform’ to ‘Market Perform’ and reduced its target from $400.00 to $375.00. While acknowledging that competition among smaller businesses, students, and freelancers remains heightened, the investment firm believes the stock appears reasonably priced. However, the firm expects the shares to remain range-bound due to the lack of near-term catalysts.
Some analysts also hold a bearish stance. On January 12, 2026, Goldman Sachs initiated coverage on Adobe Inc. (NASDAQ:ADBE), assigning a ‘Sell’ rating with a $290.00 price target. The investment bank attributed its sentiment to growth slowing down among high-end users and the company’s limited exposure to the growing, budget-conscious segment.
Adobe Inc. (NASDAQ:ADBE) leverages its Digital Media, Digital Experience, and Publishing segments to provide digital marketing and media solutions. With its offerings, the company enables content creation, customer experience optimization, and digital collaboration worldwide.
1. Merck & Co., Inc. (NYSE:MRK)
Forward Price-to-Earnings: 11.57x
Number of Hedge Fund Holders: 92
Merck & Co., Inc. (NYSE:MRK) is one of the best undervalued wide moat stocks.
With competition rising to the company’s cancer therapy Keytruda, Merck & Co., Inc. (NYSE:MRK) is setting itself up for long-term growth. On January 12, 2026, the company raised its outlook for new growth drivers. Accordingly, Merck projects $70 billion in revenue from emerging businesses by the mid-2030s.
Merck & Co., Inc. (NYSE:MRK) expects cardiometabolic and respiratory treatments to generate $20 billion, up from a prior forecast of $15 billion. Meanwhile, infectious disease drugs are projected at $15 billion, compared with $5 billion previously. The increase in expectations reflects accelerated launch plans and an expanding late-stage pipeline that has nearly tripled since 2021, including acquisitions like Acceleron.
The accelerated momentum was showcased earlier on January 8, 2026, when Reuters reported that Merck & Co., Inc. (NYSE:MRK) is working toward a $28-32 billion acquisition of Revolution Medicines, a deal not yet finalized. The deal, which could be the largest in nearly three years, is expected to add over $10 billion in risk-adjusted global sales by 2035. With this move, the company aims to offset patent expirations and strengthen its oncology pipeline.
Merck & Co., Inc. (NYSE:MRK), a healthcare provider, offers pharmaceutical, vaccines, biologics, and animal health products. The company focuses on innovation, pipeline expansion, and therapies for human and animal disease management worldwide.
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