In this article, we talk about the 13 hot stocks to buy with the highest upside potential.

On average, equities are expected continue to deliver positive results in 2026, this time with greater breadth across sectors, styles, and regions, compared to the other periods of the recent bull market when most of the growth was more concentrated across the expensive mega-cap US tech stocks, according to Steve Locke, Mackenzie Investments CIO for fixed income and multi-asset strategies. This anticipated broadening of the bull market is expected to shift focus from more popular stocks to companies across other industries that have unveiled growth stories in different markets. Locke added that investors can take advantage of this broadening by adopting a more diversified outlook, one that leverages high-growth stocks that still show potential for further price gains.

“There has been an inflection in 2025 that we would say lends support to the broadening of exposures in a portfolio,” Locke said. “We are not saying that the Magnificent Seven companies are going to become unprofitable or that their fundamentals will really lag, but what we’re thinking about are the forward earnings for these companies and how much they’ve been discounted relative to some of the other businesses that are going to use some of this innovation to propel their own profitability in 2026 and beyond.”

With that said, here is the list of the 13 hot stocks to buy with the highest upside potential.

Our Methodology

To identify the top 13 hot stocks with the highest upside potential, we used a screener to filter companies to those with a market capitalization of at least $2 billion. Then, we shortlisted stocks that gained at least 30% over the past 6 months and further filtered to include companies with at least 20% upside over the next 12 months, based on analysts’ assessments. Next, we ranked the stocks in ascending order of their average upside potential. Additionally, we included data on hedge fund holdings in these companies as of Q3 2025 to provide further insight into investor interest.

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).

13. Praxis Precision Medicines Inc. (NASDAQ:PRAX)

Potential Upside: 61.76%

Number of Hedge Fund Holders: 33

Praxis Precision Medicines Inc. (NASDAQ:PRAX) is one of the 13 hot stocks to buy with the highest upside potential. On February 2, Wells Fargo gave a more tempered assessment on the stock, initiating coverage of the company with an Equal Weight rating and a $282 price target. Wells Fargo noted that while public sentiment about ulixacaltamide, an investigational-stage treatment for essential tremor, is bullish, it sees a 50% probability of success for the drug.

Meanwhile, Praxis Precision Medicines Inc. (NASDAQ:PRAX) noted in a January 2026 presentation to investors that it expects up to $20 billion in potential peak revenue over the next 24 months across the four drugs that it anticipates launching over the period. This estimate includes about $10 billion in anticipated revenues for ulixacaltamide, as well as $5 billion for relutrigine, $4 billion for epilepsy treatment vormatrigine, and around $1 billion for elsunersen.

Praxis Precision Medicines Inc. (NASDAQ:PRAX) is a clinical-stage biopharmaceutical company engaging in the development of therapies for central nervous system disorders characterized by neuronal excitation-inhibition imbalance.

12. Apogee Therapeutics Inc. (NASDAQ:APGE)

Potential Upside: 66.02%

Number of Hedge Fund Holders: 30

Apogee Therapeutics Inc. (NASDAQ:APGE) is one of the 13 hot stocks to buy with the highest upside potential. On February 2, Jefferies lowered its price target on Apogee Therapeutics Inc. (NASDAQ:APGE) to $95 from $98 while keeping its Buy rating on the stock. The analyst also reduced its risk-adjusted peak sales forecast for Apogee’s ’279 combination therapy from $1.8 billion to $1.6 billion to reflect potential limitations in high-risk patients.

Jefferies’ price target adjustment on Apogee Therapeutics Inc. (NASDAQ:APGE) stock followed a 6% fall in the biotechnology company’s share price after Amgen discontinued its OX40 collaboration with Kyowa Kirin and Sanofi deprioritized amlitelimab in certain non-atopic dermatitis indications. The analyst also noted that it does not anticipate Kaposi’s Sarcoma to significantly impact the commercial potential of OX40 therapies; however, a potential black box warning for high-risk populations is anticipated, despite expectations for a better safety profile compared to JAK inhibitors.

Apogee Therapeutics Inc. (NASDAQ:APGE) is a biotechnology company that develops treatments for atopic dermatitis, chronic obstructive pulmonary disease, and related inflammatory and immunology indications.