In this article, we will look at the 12 Best Stocks to Invest In According to Two Sigma Advisors with Huge Upside Potential.
Two Sigma is one of the largest quantitative hedge funds in the world, with more than $70 billion in assets under management. The firm was founded in 2001 by Mark Pickard, John Overdeck, and David Siegel, and it operates via two entities: Two Sigma Investments, LP (TSI) and Two Sigma Advisors, LP (TSA). TSI is the primary arm that builds and tests proprietary algorithmic trading models, which it then licenses to TSA. TSA, in turn, uses those models to trade on behalf of its customized portfolios and private fund clients, and it leans quite heavily on artificial intelligence and data science to drive its investment decisions.
That AI-based approach appears to be paying off, because it may have helped Two Sigma outperform many of its rivals in the first quarter of this year. According to a Bloomberg report, the quarter, and especially the month of March was a chaotic one for markets, which saw the S&P 500 fall by about 5%. Yet Two Sigma’s Spectrum fund rose 2.5% in March alone, while its Absolute Return fund gained 3%. For the year, those two funds were up 3% and 3.7%, respectively, as of March 31. This performance was better than that of many multistrategy peers, whose results ranged from meager gains to outright losses, Bloomberg noted.
This focus on AI isn’t contrarian, either, because the rest of the industry is racing to catch up. A June 24 Bloomberg analysis, citing a Barclays survey, found that half of long-only managers and the majority of hedge funds now use AI on a daily basis, largely for research. The survey also established that the technology is increasingly supporting risk management and modeling work.
Against this backdrop, this article explores 12 stocks favored by Two Sigma that have substantial upside potential.
Our Methodology
To create this list, we scanned through Two Sigma Advisors’ Q1 2026 portfolio, focusing only on the top 1000 holdings, and obtained their upside potential based on Wall Street analysts’ 12-month price targets as of June 29, 2026. We filtered the list for names with upside potential of at least 50%. We also considered the overall hedge fund sentiment for each stock using Q1 2026 13F holdings data from Insider Monkey’s database. The list is in ascending order of upside potential.
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. Insider Monkey’s quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 599.2% since May 2014, beating its benchmark by 372 percentage points (see more details here).
Best Stocks to Invest In According to Two Sigma Advisors with Huge Upside Potential
12. Trip.com Group Limited (NASDAQ:TCOM)
Stock Upside Potential: 51.29%
Number of Hedge Fund Holders: 38
Two Sigma Advisors’ Stake: $124,020,567
Trip.com Group Limited (NASDAQ:TCOM) is one of the best stocks to invest in according to Two Sigma Advisors with huge upside potential. On June 25, Citi analyst Brian Gong cut his price target on Trip.com Group Limited (NASDAQ:TCOM) to $64 from $82 while maintaining a Buy rating.
According to the analyst, the call was made because of Trip.com’s disappointing Q2 2026 guidance, where the company projected revenue growth of just 3% to 8%. In his view, this expectation is too sharp of a deceleration from the 17% year-over-year growth the company posted in Q1 2026. The analyst however acknowledged the challenges the company is facing, especially elevated fuel costs, which is a huge factor suppressing travel demand. The suppressed travel demand is feeding directly into the weaker revenue outlook for the current quarter, Gong noted.
Regardless, the analyst’s position is that the fundamental long-term case for Trip.com remains intact. This means that the lower target is essentially a recalibration of short-term expectations.
On the same day, Benchmark’s Fawne Jiang also cut his target on Trip.com from $72 to $65 and kept a Buy rating on the stock. Like Gong, Jiang explained that his decision came down to Trip.com’s “softer-than-expected second-quarter 2026 guidance.” Jiang added that his firm lowered its FY2026 forecasts to factor in a cautious demand outlook in the near term, as well as limited visibility through the year’s second half.
Trip.com Group Limited (NASDAQ:TCOM) is an online travel company. It operates a portfolio of travel booking platforms including Trip.com, Ctrip, Skyscanner, and Travelfusion, offering hotel reservations, flight ticketing, packaged tours, and corporate travel management services primarily across China and international markets.
11. Insulet Corporation (NASDAQ:PODD)
Stock Upside Potential: 52.78%
Number of Hedge Fund Holders: 55
Two Sigma Advisors’ Stake: $159,971,314
Insulet Corporation (NASDAQ:PODD) is one of the best stocks to invest in according to Two Sigma Advisors with huge upside potential. On June 23, Deutsche Bank analyst Kieran Ryan initiated coverage on Insulet Corporation (NASDAQ:PODD) with a Buy rating and a price target of $190.
Ryan views Insulet as the dominant player in the tubeless insulin pump market, and that it has one of the strongest and most durable growth profiles in the medical device space. The analyst considers the company a market leader whose fundamentals remain intact despite the stock’s poor run since late last year.
Nonetheless, Ryan acknowledged that Insulet faces rising competition in the tubeless pump space. It also faces pressure from the pharmacy channel, which is a distribution route where rivals could chip away at Insulet’s market share. However, the analyst’s position is that the stock has already been discounted enough to account for both of these concerns, making further downside from here less likely.
For context, one of the broader fears weighing on diabetes device stocks, including Insulet, has been the rise of GLP-1 weight-loss drugs like Ozempic and Wegovy. Investors have worried these drugs could shrink the pool of patients who need insulin delivery devices. Deutsche Bank, however, views those fears as exaggerated and already factored into the current valuation.
Insulet Corporation (NASDAQ:PODD) is a medical device company. It develops, manufactures, and markets insulin delivery systems for people with diabetes, with its Omnipod platform providing tubeless, wearable insulin pumps.
