In this article, we will list the 5 Best Upside Stocks to Buy According to Hedge Funds. Please visit 10 Best Upside Stocks to Buy According to Hedge Funds to see the extended list and the methodology behind it.
5. Resideo Technologies Inc. (NYSE:REZI)
Average Upside Potential: 53.48%
Number of Hedge Fund Holders: 51
Resideo Technologies Inc. (NYSE:REZI) is one of the best upside stocks to buy according to hedge funds. On June 16, Resideo Technologies announced the pricing of $400 million in senior notes due 2034, bearing an interest rate of 7.125%, in preparation for the planned spin-off of its ADI Global Distribution business. This offering is part of a broader financial strategy for ADI, which also includes the syndication of a $600 million senior secured term loan and a $500 million revolving credit facility.
These steps are designed to capitalize ADI as an independent entity ahead of the spin-off, which is expected to occur between mid-Q3 and mid-Q4 of 2026. Proceeds from the notes and the term loan will be primarily used to make a distribution to Resideo and to cover transaction-related expenses. The note proceeds will be held in escrow until the spin-off is finalized, at which point the debt will be assumed by an ADI subsidiary and guaranteed by ADI and its relevant subsidiaries. If the spin-off conditions are not satisfied by the end of 2026, the notes will be subject to a mandatory redemption at their issue price.
This financing initiative marks a key milestone in the separation of the two businesses. Once the spin-off is complete, ADI will operate as an independent entity with its own credit structure, while Resideo Technologies Inc. (NYSE:REZI) maintains its focus on global technology-driven sensing and control solutions.
Resideo Technologies Inc. (NYSE:REZI) makes smart home technology for comfort, energy management, and safety, including thermostats (Honeywell Home), smoke detectors, security systems, and water management, and also operates ADI Global Distribution, a major wholesale distributor of security, fire, and low-voltage products to professionals worldwide.
4. Dyne Therapeutics Inc. (NASDAQ:DYN)
Average Upside Potential: 90.73%
Number of Hedge Fund Holders: 51
Dyne Therapeutics Inc. (NASDAQ:DYN) is one of the best upside stocks to buy according to hedge funds. On June 17, Dyne Therapeutics expanded its senior secured term loan facility with Hercules Capital to up to $400 million, increasing financial flexibility. This amendment includes an immediate $50 million funding and provides additional tranches tied to specific clinical and regulatory milestones. These funds will support the advancement of the company’s lead candidates, z-rostudirsen for Duchenne muscular dystrophy and z-basivarsen for myotonic dystrophy type 1.
The expanded partnership strengthens Dyne’s balance sheet as it prepares for two potential US commercial launches over the next two years. By securing non-dilutive capital, the company aims to maintain momentum in its mission to deliver functional improvements for patients with rare neuromuscular diseases. The agreement reflects Hercules Capital’s continued support for Dyne’s clinical progress and transformative development stage.
To date, Dyne Therapeutics Inc. (NASDAQ:DYN) has borrowed a total of $200 million under the facility and maintains access to an additional $200 million in potential future funding. This arrangement provides the capital necessary to reach key milestones while optimizing the company’s financial position. The collaboration highlights a shared commitment to accelerating the delivery of innovative treatments to patients in need.
Dyne Therapeutics Inc. (NASDAQ:DYN) engages in developing innovative life-transforming therapies for genetically driven muscle diseases. It develops a broad portfolio of therapeutics for muscle diseases, including lead programs in myotonic dystrophy type 1, Duchenne muscular dystrophy, and facioscapulohumeral muscular dystrophy.
3. Praxis Precision Medicines Inc. (NASDAQ:PRAX)
Average Upside Potential: 81.74%
Number of Hedge Fund Holders: 54
Praxis Precision Medicines Inc. (NASDAQ:PRAX) is one of the best upside stocks to buy according to hedge funds. On June 22, Praxis Precision Medicines received FDA Breakthrough Therapy Designation for elsunersen, an experimental treatment for seizures associated with SCN2A-DEE. This follows strong results from the EMBRAVE Part A trial, where the drug achieved a 77% sham-adjusted reduction in monthly seizures and was well-tolerated by pediatric patients.
The designation supports a streamlined, single-arm registrational pathway for the ongoing pivotal EMBRAVE3 study. By facilitating expedited development and regulatory review, this status aims to accelerate the delivery of elsunersen as the first disease-modifying therapy for patients with this rare genetic condition.
This achievement marks the third Breakthrough Therapy Designation for Praxis Precision Medicines Inc.’s (NASDAQ:PRAX) late-stage pipeline, validating its Solidus ASO platform. Developed alongside Ionis Pharmaceuticals and RogCon, elsunersen now holds multiple key regulatory designations in both the US and Europe, positioning it for rapid advancement toward potential approval.
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.
2. BridgeBio Pharma Inc. (NASDAQ:BBIO)
Average Upside Potential: 44.83%
Number of Hedge Fund Holders: 63
BridgeBio Pharma Inc. (NASDAQ:BBIO) is one of the best upside stocks to buy according to hedge funds. On May 27, BridgeBio Pharma announced that the FDA accepted its NDA for BBP-418, an oral therapy for limb-girdle muscular dystrophy type 2I/R9 (LGMD2I/R9), granting it Priority Review. With a target action date of November 27, the therapy could become the first approved treatment for any form of LGMD. The FDA is not currently planning an advisory committee meeting to discuss the application.
This milestone follows the Phase 3 FORTIFY trial, where BBP-418 showed strong efficacy across all pre-specified endpoints. While patients on the placebo declined in line with natural disease progression, those treated with BBP-418 showed consistent improvements, highlighting the therapy’s potential to stabilize or enhance muscle, ambulatory, and cardiopulmonary function in a patient population with significant unmet needs.
Already holding Orphan Drug, Fast Track, and Rare Pediatric Disease designations, BBP-418 is positioned to address a critical gap in care for approximately 7,000 individuals in the US and Europe. BridgeBio Pharma Inc. (NASDAQ:BBIO) is currently coordinating with European regulators for an expedited approval path and plans to expand clinical studies for younger pediatric populations and other related dystroglycanopathies in the near future.
BridgeBio Pharma Inc. (NASDAQ:BBIO) identifies and promotes novel medications to treat Mendelian diseases. Its development pipeline contains product candidates at various stages of development, from early discovery to late-stage development.
1. Cogent Biosciences Inc. (NASDAQ:COGT)
Average Upside Potential: 53.74%
Number of Hedge Fund Holders: 77
Cogent Biosciences Inc. (NASDAQ:COGT) is one of the best upside stocks to buy according to hedge funds. On June 12, Cogent Biosciences presented promising preclinical data at the 2026 EHA Congress for its novel inhibitor, CGT1145, which targets the JAK2 V617F mutation. This candidate is designed to be a best-in-class therapy, showing over 100-fold selectivity for the mutant protein compared to wild-type JAK2 and other isoforms. These properties suggest a potential to treat myeloproliferative neoplasms/MPNs more effectively while reducing the off-target side effects often seen with currently approved treatments.
The data indicates that CGT1145 exhibits high oral bioavailability and could potentially induce molecular remission by eradicating disease-propagating cells. By addressing the primary mutational driver of these conditions with improved hematological tolerability, the program aims to offer a significant advancement over existing JAK inhibitors.
Cogent Biosciences Inc. (NASDAQ:COGT) is currently advancing the development of this program and remains on schedule to submit an Investigational New Drug (IND) application later in 2026. This progress underscores the company’s commitment to developing precision therapies for patients with genetically defined diseases, particularly in the MPN space where JAK2 V617F remains a prevalent and critical target.
Cogent Biosciences Inc. (NASDAQ:COGT) is a biotechnology company that develops precision therapies for genetically defined diseases.
While we acknowledge the potential of COGT to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than COGT and that has 100x upside potential, check out our report about the cheapest AI stock.
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