On January 27, Matt Stucky of Northwestern Mutual joined ‘Closing Bell Overtime’ on CNBC to discuss the shifting dynamics of the 2026 stock market and the broadening of investor interest beyond mega-cap tech names. He explained that while high interest rates previously restricted growth to narrow infrastructure plays, the current environment of falling rates is allowing cyclical sectors and small-cap companies to gain momentum. This transition has led to improved earnings revisions across these neglected segments, serving as the primary catalyst for unlocking value that had been suppressed for three years. Stucky emphasizes that the recipe for continued outperformance lies in consistent upward earnings revisions and the further compression of the valuation spread between small and large caps.
Regarding portfolio strategy, Stucky clarified that while he is moving down the cap scale toward mid and small caps, as well as into international stocks and investment-grade fixed income, he is not abandoning mega-cap tech. He respects the quality and earnings growth of the MAG7 but warned that extreme market concentration increases the risk profile should disappointments occur. He posits that the next leg of the trade belongs to companies that use the AI products being built by the tech giants. Because mid and small-cap companies are more labor-intensive, they stand to benefit the most from AI-driven productivity gains. Stucky concluded that if these technologies serve as significant productivity enhancers over the next few years, the earnings leverage will shift toward the users of these tools, providing a strong reason for optimism in broader market segments.
That being said, we’re here with a list of the 11 most undervalued mid cap stocks to buy now.
Our Methodology
We sifted through the Finviz stock screener to compile a list of stocks that had a forward P/E ratio under 15 and were trading between $2 billion and $10 billion. We then selected 11 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 February 12.
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).
11 Most Undervalued Mid Cap Stocks to Buy Now
11. Axalta Coating Systems Ltd. (NYSE:AXTA)
Number of Hedge Fund Holders: 46
Axalta Coating Systems Ltd. (NYSE:AXTA) is one of the most undervalued mid cap stocks to buy now. On February 11, UBS analyst Joshua Spector raised the firm’s price target on Axalta Coating to $36 from $35 and maintained a Neutral rating.
On the same day, Baird raised its price target on Axalta Coating to $37 from $35 while maintaining a Neutral rating. The firm updated its financial model following the company’s Q4 2025 results and noted that execution remains solid.
BMO Capital also raised its price target on Axalta Coating Systems Ltd. (NYSE:AXTA) to $35 from $33 while keeping a Market Perform rating. The firm noted that the company’s Q4 results continued a trend observed throughout 2025, with the Refinish segment underperforming expectations due to struggling volumes in North America. BMO Capital added that it remains unconvinced of a near-term inflection or improvement in the Refinish business.
Axalta Coating Systems Ltd. (NYSE:AXTA), through its subsidiaries, manufactures, markets, and distributes high-performance coatings systems in North America, Europe, the Middle East, Africa, the Asia Pacific, and Latin America. It has two segments: Performance Coatings and Mobility Coatings.
10. Booz Allen Hamilton Holding Corp. (NYSE:BAH)
Number of Hedge Fund Holders: 47
Booz Allen Hamilton Holding Corp. (NYSE:BAH) is one of the most undervalued mid cap stocks to buy now. On January 27, UBS raised its price target on Booz Allen to $97 from $93 while maintaining a Neutral rating. This firm noted that while topline visibility remains limited, the company’s earnings are holding up.
A day before that, Stifel raised its price target on Booz Allen to $115 from $106 with a Hold rating. The firm described Booz Allen’s FQ3 results as surprise-free and noted that revenue missed expectations and earnings beat, while management largely maintained its full-year outlook. The firm indicated that it is looking for signs of underlying acceleration to drive the stock’s future performance.
On January 23, Truist raised its price target on Booz Allen Hamilton Holding Corp. (NYSE:BAH) to $98 from $90 with a Hold rating. The firm increased its FY 2027 and FY 2028 EPS estimates to reflect tax-related tailwinds and anticipated cost reductions. Truist noted that the company could benefit from projected growth in defense spending and incremental One Big Beautiful Bill funding, though it expects civil spending to be a primary target for future cuts in the coming years.
Booz Allen Hamilton Holding Corp. (NYSE:BAH) is a technology company that provides technology solutions using AI, cyber, and other technologies for the government’s cabinet-level departments and commercial customers in the US and internationally.
