On January 5, Reuters reported that many analysts believe global investors will actively look for opportunities in undervalued areas of the financial markets in 2026. Rising worries about a possible AI bubble are pushing investors to move away from highly valued tech stocks and search for value in other areas.
According to strategists at BlackRock Investment Institute, the environment is “ripe for active investing.”
US stock markets were volatile in 2025, falling near bear market levels in April after President Trump announced tariffs. However, the markets recovered later and reached record highs. Analysts expect this positive momentum to continue into 2026 but also noted that investors will need to be more selective when picking stocks.
US small-cap stocks could also return to the spotlight after being on the sidelines for years. Improving earnings prospects and lower borrowing costs are expected to support this. Oren Shiran, portfolio manager at Lazard Asset Management, said:
“The big difference going into 2026 is that we finally are seeing earnings growth come back into small caps.”
Jefferies equity strategist Steven DeSanctis also forecasts that the Russell 2000 index, which tracks small-cap stocks, to rise and reach 2,825 points by the end of 2026. This would represent an increase of nearly 14% from 2025 levels.
With this background in mind, let’s take a look at the 12 stocks that will bounce back according to Wall Street analysts.
Our Methodology
To compile our list of the 12 stocks that will bounce back according to Wall Street analysts, we looked for stocks that have lost at least 30% in the last 6 months as of January 7, 2026. To find stocks that will bounce back, we narrowed down our selection by looking for stocks that analysts believe will gain at least twice as much as they have lost in the last 6 months. Finally, we ranked the stocks based on their average price target upside potential according to analysts as of January 7, 2026.
Additionally, we mentioned the hedge fund sentiment surrounding each stock, which was taken from Insider Monkey’s Q3 2025 database of 978 elite hedge funds.
Why do we care about what hedge funds do? 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).
12 Stocks that Will Bounce Back According to Wall Street Analysts
12. Five9, Inc. (NASDAQ:FIVN)
6-Month Performance: -31.55%
Average Price Target Upside Potential According to Analysts: 75.53%
Number of Hedge Fund Holders: 36
Five9, Inc. (NASDAQ:FIVN) ranks among the stocks that will bounce back according to Wall Street analysts. On January 5, Piper Sandler downgraded its rating on Five9, Inc. (NASDAQ:FIVN) from Overweight to Neutral and lowered its price target from $26 to $21.
The firm acknowledged that Five9, Inc. (NASDAQ:FIVN) shares look attractive based on valuation and risk-reward. However, the company has room to improve its free cash flow. Piper Sandler also noted that the company is slowly gaining share in the broader customer experience market.
The research firm raised concerns about Five9, Inc. (NASDAQ:FIVN) not gaining market share in the Contact Center as a Service (CCaaS) segment. The company is facing positioning challenges in the upmarket segment and is also dealing with rising competition.
Piper Sandler also noted that Five9, Inc.’s (NASDAQ:FIVN) revenue growth has decelerated to below 10%. While the company’s management has shared an outlook for 2026 that suggests growth could accelerate again to above 10% in the second half of 2026, the firm believes this improvement will likely take time to materialize.
Previously, on December 18, DA Davidson also reaffirmed its Neutral rating on Five9, Inc. (NASDAQ:FIVN) with a price target of $24 after the company announced a new CEO. Da Davidson sees the new CEO, Amit Mathradas, as a “positive addition.” The firm highlighted his experience in scaling businesses internationally and driving product innovation.
Five9, Inc. (NASDAQ: FIVN) is a leading provider of call center solutions. With its Intelligent CX Platform, the company helps businesses manage customer interactions for enhanced customer experience (CX) and agent efficiency.
11. Surgery Partners, Inc. (NASDAQ:SGRY)
6-Month Performance: -30.12%
Average Price Target Upside Potential According to Analysts: 79.03%
Number of Hedge Fund Holders: 30
Surgery Partners, Inc. (NASDAQ:SGRY) ranks among the stocks that will bounce back according to Wall Street analysts. On December 19, RBC Capital reiterated its Buy rating on Surgery Partners, Inc. (NASDAQ:SGRY) with a price target of $31 on the stock. The research firm believes that the company’s long-term growth prospects are still intact.
Earlier, on December 18, Mizuho Securities reduced its price target on Surgery Partners, Inc. (NASDAQ:SGRY) from $22 to $19 but kept its Outperform rating on the shares. This update was part of the research firm’s 2026 outlook for managed care and health facilities.
Mizuho Securities believes that 2026 will prove to be a “pivotal year” for the sector. The firm noted that the sector is coming out of a three-year negative underwriting cycle. The firm’s analyst told investors in a research note that margins are expected to improve across commercial insurance, Medicaid, and Medicare over the coming years. Even after lowering its price target on Surgery Partners, Inc. (NASDAQ:SGRY), Mizuho Securities remains positive on managed care heading into 2026.
Surgery Partners, Inc. (NASDAQ:SGRY) is a leading healthcare services company that operates a network of more than 200 locations in 30 states, including ambulatory surgery centers, surgical hospitals, multi-specialty physician practices, and urgent care facilities.
