On June 16, Savita Subramanian, BofA Securities, joined CNBC’s ‘Power Lunch’ to discuss the overall market environment and whether earnings momentum can continue. While she clarified that she is not outright bearish and sees several attractive opportunities within the S&P 500, specifically recommending the Russell Large Cap Value index, she contended that it has become increasingly difficult to clock further gains from current levels. She outlined several reasons for this stance: good news is already priced in, tech sectors are beginning to experience multiple compressions, and supply-demand dynamics are shifting, with buybacks slowing down among hyperscalers.

Furthermore, Subramanian noted that the shrinkage of available public equity appears to be a trend of the past, and the liquidity spigot is being turned off as the market pivots from expecting Fed and central bank rate cuts to receiving none. She emphasized that while last year saw a record-breaking liquidity environment fueled by buying from individual investors, corporations, and the government, this year features less of that liquidity machine.

In response to a mention of Ed Yardeni’s recent FEMO (fabulous earnings momentum) thesis, Subramanian acknowledged that earnings have been strong, with a 30% increase in Q1, and that strong earnings can indeed fuel gains. However, she argued that the market reacts not just to earnings, but to surprises relative to expectations. She pointed out that analysts are currently forecasting close to the highest long-term earnings growth rates in the history of her data, making it difficult for companies to continue delivering the massive positive surprises that have previously driven the market. She notes that the market’s recent gains were driven by specific, major surprises, like the arrival of ChatGPT, the recovery from COVID, and government or Fed stimulus, and suggested that unless these levers are re-amplified, such as through a ChatGPT part 2, the potential for further upside surprises is limited.

Our Methodology

We used screeners to identify promising stocks that had an average upside potential of at least 45%. We limited our final selection to companies that have recently reported noteworthy developments likely to impact investor sentiment. These stocks are also popular among elite hedge funds and are ranked in ascending order of their upside potential.

Note: All data was sourced on June 19. 

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).

10 Most Promising Stocks with Highest Upside Potential

10. Accenture (NYSE:ACN)

Average Upside Potential: 45.34%

Accenture (NYSE:ACN) is one of the most promising stocks with highest upside potential. On June 18, Accenture announced agreements to acquire a majority stake in Dragos, alongside full acquisitions of runZero and NetRise, for a combined enterprise value of ~$4.175 billion. This move aims to deliver a unified, end-to-end cybersecurity platform for “xOT” environments, which include the critical infrastructure and industrial systems that power energy grids, manufacturing, and data centers.

By integrating Dragos’s OT threat detection with runZero’s attack-surface intelligence and NetRise’s firmware and software supply chain visibility, Accenture aims to create a comprehensive solution for industrial operators. The combined platform will provide a single, vendor-neutral control plane that helps organizations visualize their networks, identify vulnerabilities, and proactively defend against AI-driven cyber threats and geopolitical risks.

These acquisitions significantly expand Accenture’s (NYSE:ACN) footprint from cybersecurity services into the broader OT software market, a sector projected to reach ~$59 billion by 2031. Dragos will continue to operate as an independent business under its current CEO, Robert M. Lee, while using Accenture’s global scale and deep industrial expertise to accelerate the protection of critical infrastructure worldwide.

Accenture (NYSE:ACN) is a global professional services company specializing in strategy, consulting, technology, and digital transformation. Headquartered in Dublin, Ireland, the company provides services in cloud computing, artificial intelligence, security, and operations, helping organizations modernize systems and drive innovation across industries.

9. Veeva Systems Inc. (NYSE:VEEV)

Average Upside Potential: 53.29%

Veeva Systems Inc. (NYSE:VEEV) is one of the most promising stocks with highest upside potential. On June 3, Veeva Systems reported strong financial results for its FQ1 2027, with total revenues reaching $882.9 million, a 16% increase year-over-year. Subscription revenues also saw steady growth, rising 15% to $730.2 million. The company exceeded its guidance across all metrics, leading to an increase in its full-year financial outlook.

The company is undergoing a strategic transformation from an industry-specific application provider to an AI agent company. Key progress includes the integration of conversational AI through the acquisition of Ostro, the upcoming expansion of Vault AI, and the planned early adopter release of Veeva Falcon in November, a platform designed to provide agentic labor for clinical, regulatory, and safety workflows.

Veeva Systems Inc.’s (NYSE:VEEV) commercial sector momentum remains strong, adding 27 new Vault CRM customers this quarter to surpass 150 live implementations. With raised guidance for the remainder of the fiscal year, management remains focused on using these agentic AI capabilities to help life sciences customers accelerate drug development and improve patient outcomes.

Veeva Systems Inc. (NYSE:VEEV) is a provider of cloud-based solutions for the global life sciences industry. Its offerings include cloud software, AI, data, and business consulting.

5. Applied Digital Corp. (NASDAQ:APLD)

Average Upside Potential: 59.91%

Applied Digital Corp. (NASDAQ:APLD) is one of the most promising stocks with highest upside potential. On June 18, Applied Digital completed a $1.59 billion private offering of 7.000% senior secured notes due in 2031. The proceeds are designated to fund the development of 150 MW of critical IT load at the company’s Polaris Forge 1 AI data center campus in Ellendale, North Dakota, while also settling a $300 million bridge loan previously provided by Goldman Sachs.

The notes carry an annual interest rate of 7%, payable semi-annually, and are secured by first-priority liens on the issuer’s assets. This financing replaces shorter-term construction debt with five-year capital, providing a stable foundation for the continued expansion of the Ellendale site, which is anchored by long-term leases with major tenant CoreWeave.

By securing this long-term debt, Applied Digital Corp. (NASDAQ:APLD) reinforces its commitment to its massive AI infrastructure project. The company has also provided completion guarantees for the project, ensuring that the necessary funding is available to meet development timelines, further solidifying its position in the rapidly growing high-performance computing market.

Applied Digital Corp. (NASDAQ:APLD) builds and operates digital infrastructure for AI and computing companies in North America. The company provides data centres and GPU computing solutions for businesses working in AI. It is headquartered in Dallas, Texas, and was founded in 2021 by Wes Cummins and Jason Zhang.

Reuters reported that the strategy also includes more automation, stronger social media marketing, and an effort to make stores easier to run, with more financial details expected at a September investor event. The update fits McDonald’s push to protect traffic and franchise economics while customers remain sensitive to value after several years of higher food prices globally.

McDonald’s Corporation (NYSE:MCD) is a global foodservice company with restaurants in more than 100 countries. The company operates through a heavily franchised model, with most restaurants owned and operated by independent local business owners.

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While we acknowledge the potential of MCD as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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For investors, the approval gives Merck another approved use around KEYTRUDA, its flagship cancer drug, while also building WELIREG beyond later-stage treatment. The decision was supported by a late-stage trial of 1,841 patients. In other terms, patients receiving WELIREG with KEYTRUDA were less likely to see their cancer come back, spread, or lead to death than patients receiving KEYTRUDA with a placebo. Merck said the combination reduced that risk by 28%, with 81% of patients alive without disease recurrence at 24 months, compared with 74% in the control group.

Merck & Co., Inc. (NYSE:MRK) is a global pharmaceutical company known as MSD outside the United States and Canada. The company develops medicines and vaccines across oncology, infectious diseases, cardiometabolic disease, immunology, neuroscience, and animal health.

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While we acknowledge the potential of MRK as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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READ NEXT: 33 Stocks That Should Double in 3 Years and Cathie Wood 2026 Portfolio: 10 Best Stocks to Buy. 

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The deal puts Microsoft’s AI tools inside one of the world’s biggest professional-services networks, where audit, tax, and advisory teams can push clients from small AI tests toward broader production use. KPMG is also using Azure AI Foundry as the base for KPMG Workbench, a platform coordinating multiple AI agents across client-service systems. The expansion strengthens Microsoft’s enterprise AI channel as corporate buyers demand governance, security, and measurable workflow gains.

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Microsoft Corporation (NASDAQ:MSFT) develops software, cloud infrastructure, productivity tools, gaming platforms, and artificial intelligence products. Its major businesses include Azure, Microsoft 365, Windows, LinkedIn, Dynamics, GitHub, and Xbox.

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While we acknowledge the potential of MSFT as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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READ NEXT: 33 Stocks That Should Double in 3 Years and Cathie Wood 2026 Portfolio: 10 Best Stocks to Buy. 

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The companies also plan to explore a cross-border supply chain finance ecosystem for small and medium-sized businesses, giving Mastercard another path into trade-related payment flows beyond consumer card spending. The partnership also includes risk management, identity authentication, real-time monitoring, and fraud-prevention tools, areas that remain central as digital commerce becomes more global and automated. Mastercard and JD.com also said they would explore agentic AI-powered purchasing through Mastercard Agent Pay and expand co-branded card initiatives.

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Mastercard Incorporated (NYSE:MA) is a global payments technology company that connects consumers, merchants, financial institutions, businesses, governments, and digital partners. The company provides payment processing, cybersecurity, data analytics, loyalty, consulting, and money-movement services across more than 200 countries and territories.

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While we acknowledge the potential of MA as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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READ NEXT: 33 Stocks That Should Double in 3 Years and Cathie Wood 2026 Portfolio: 10 Best Stocks to Buy. 

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The modest same-store growth shows a still-muted home improvement backdrop, but the company held its full-year outlook, signaling that demand had not deteriorated beyond management’s expectations. CEO Ted Decker said underlying demand was relatively similar to fiscal 2025 despite greater consumer uncertainty and housing affordability pressure. Home Depot reaffirmed fiscal 2026 guidance for total sales growth of 2.5% to 4.5%, comparable sales growth of flat to 2%, about 15 new stores, and diluted EPS growth of flat to 4% from fiscal 2025, keeping the story centered on resilience rather than acceleration.

The Home Depot, Inc. (NYSE:HD) is the world’s largest home improvement retailer. The company sells building materials, home improvement products, lawn and garden supplies, décor, installation services, tool rentals, and professional contractor products through stores and digital channels.

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While we acknowledge the potential of HD as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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READ NEXT: 33 Stocks That Should Double in 3 Years and Cathie Wood 2026 Portfolio: 10 Best Stocks to Buy. 

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The same day, Visa also introduced new AI, token, and stablecoin tools at its Payments Forum, including an Agentic Directory for verified agents and merchants, an AI model trained on billions of transactions to improve fraud detection and approvals, and stablecoin settlement pilots running at about a $7 billion annualized rate as of March 2026. The updates position Visa more deeply in emerging payment flows as commerce becomes more automated.

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Visa Inc. (NYSE:V) is a global payments technology company that connects consumers, merchants, financial institutions, businesses, governments, and digital partners. The company provides payment processing, security, data analytics, consulting, and money-movement services across more than 200 countries and territories.

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While we acknowledge the potential of V as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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READ NEXT: 33 Stocks That Should Double in 3 Years and Cathie Wood 2026 Portfolio: 10 Best Stocks to Buy. 

Disclosure: None. Follow Insider Monkey on Google News.

The announcement links Cisco’s AI infrastructure and security stack with Equinix’s data center footprint and NVIDIA reference architectures, giving enterprises standardized blueprints and automation for moving AI projects from pilot work into production. Presidio is also deploying its Programmable AI Technology Hub Lab inside Equinix data centers, built on Cisco Secure AI Factory with NVIDIA, so customers can test, validate, and refine AI infrastructure before wider rollout. The collaboration reinforces Cisco’s push to sell networking, security, and AI infrastructure as enterprises look for practical ways to run demanding AI workloads across hybrid environments.

Cisco Systems, Inc. (NASDAQ:CSCO) provides networking, security, collaboration, observability, and cloud infrastructure products and services. The company serves enterprises, service providers, public-sector customers, and technology partners worldwide.

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While we acknowledge the potential of CSCO as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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READ NEXT: 33 Stocks That Should Double in 3 Years and Cathie Wood 2026 Portfolio: 10 Best Stocks to Buy. 

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The company said the investment is part of its broader $55 billion U.S. commitment to manufacturing, research and development, and technology through early 2029. Construction is already underway, with the facility expected to be fully operational in 2028. The expansion builds on J&J’s more than 40-year presence in Jacksonville, where it says it manufactures more than 1.7 billion ACUVUE lenses annually and supports 3,500 local employees.

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Johnson & Johnson (NYSE:JNJ) is a global healthcare company operating through its Innovative Medicine and MedTech segments. Its businesses include pharmaceuticals, medical devices, surgery, orthopedics, cardiovascular technology, and vision care.

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While we acknowledge the potential of JNJ as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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READ NEXT: 33 Stocks That Should Double in 3 Years and Cathie Wood 2026 Portfolio: 10 Best Stocks to Buy. 

Disclosure: None. Follow Insider Monkey on Google News.

Apple said Siri AI can understand what is on a user’s screen, use personal context across apps, search messages, emails, and photos, and complete actions across apps. The company also introduced AI features for Safari, Passwords, Messages, Mail, Calendar, Shortcuts, and Home. Some server-powered features will have daily limits, with increased access available through most iCloud+ plans, adding a services angle to the AI rollout.

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Apple Inc. (NASDAQ:AAPL) designs and sells consumer electronics, software, and digital services. Its major products and platforms include iPhone, Mac, iPad, Apple Watch, AirPods, Vision Pro, iOS, macOS, the App Store, Apple Pay, iCloud, Apple Music, and Apple TV.

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While we acknowledge the potential of AAPL as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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READ NEXT: 33 Stocks That Should Double in 3 Years and Cathie Wood 2026 Portfolio: 10 Best Stocks to Buy. 

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Capital One Financial Corporation (NYSE:COF) is a relatively recent addition to the 13F portfolio of Berkshire Hathaway. The fund first disclosed a stake in the company in the first quarter of 2023. Back then, this position comprised over 9.9 million shares. In the next quarter, the fund added to this position by 25%, growing share ownership to just under 12.5 million shares. In the second quarter of 2024, the fund trimmed the stake by over 21%, bringing share ownership down to around 9.8 million shares. Filings for the first quarter of 2026 show that the fund owned 7.1 million shares in the company, the same as in the previous quarter.

Capital One Financial Corporation (NYSE:COF) has been attracting interest from investors on Wall Street following a narrow headline miss in the latest earnings report. The firm reported a first-quarter net income of $2.2 billion. Adjusted EPS came in at $4.42, slightly trailing Wall Street consensus estimates of $4.51–$4.61 due to heavy integration-related adjustments. Total net revenue hit $15.23 billion against the $15.37 billion expected. Despite the minor miss, core business performance was highly positive. Pre-provision earnings actually increased 8% sequentially to $6.8 billion. The firm is in the process of integrating Discover Financial Services and the long-term prospects of this merger remain highly attractive to elite investors.

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While we acknowledge the potential of COF as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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HSBC expects the partnership to support more than 200 new AI use cases over the next two years, adding to more than 600 HSBC applications already running on Google Cloud. The first areas include personalized wealth-management support, financial-crime risk management, and AI tools for frontline and relationship-manager work. HSBC also said the financial-crime tools could help it intervene twice as fast when risk is detected, across nearly one billion transactions monitored each month.

Pixabay/Public Domain

Alphabet Inc. (NASDAQ:GOOGL) is the parent company of Google. Its businesses include Search, YouTube, Google Cloud, Android, Chrome, Google Play, hardware, advertising technology, artificial intelligence research, and other bets such as Waymo.

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While we acknowledge the potential of GOOGL as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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READ NEXT: 33 Stocks That Should Double in 3 Years and Cathie Wood 2026 Portfolio: 10 Best Stocks to Buy. 

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Citigroup Inc. (NYSE:C) was once a consistent feature in the 13F portfolio of Berkshire Hathaway. The fund first disclosed a stake in the company back in the first quarter of 2022. Back then, this position comprised 55 million shares. No activity was registered against this holding until the fourth quarter of 2024, when the fund trimmed this holding by close to 75% and reduced share ownership to around 14 million shares. In the first quarter of 2025, the fund declared that it had sold off this stake completely. Citi is a diversified financial service holding company that provides various financial products and services.

Citigroup Inc. (NYSE:C) completely rewrote its financial narrative with its first-quarter 2026 earnings report, posting fundamental metrics that shattered consensus Wall Street expectations. The firm reported a normalized EPS of $3.06, beating the consensus Wall Street forecast of $2.60 to $2.67 per share. This marked a 56% year-over-year surge. Total revenue hit $24.63 billion, up 14.1% year-over-year, representing the bank’s highest single-quarter revenue haul in ten years. Net income jumped 42% to $5.8 billion. Revenue in Citi’s high-margin Services division surged 17%, fueled by a 40% increase in new client mandates and a 12% rise in cross-border transaction volumes.

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While we acknowledge the potential of C as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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READ NEXT: Growth Stock Portfolio: 12 Stock Picks by Carl C. Icahn and Chris Rokos Stock Portfolio: Top 10 Stock Picks.

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Mastercard Incorporated (NYSE:MA) was one of the long-term holdings of Berkshire Hathaway for the past many years. The fund had first disclosed a stake in the company back in the first quarter of 2011. Back then, this position comprised a little over 2.1 million shares. By the next quarter, the fund had almost doubled this holding to 4 million shares. By late 2014, this stake had grown to around 5.4 million shares. Thereafter, the fund trimmed this holding very slowly. By late 2021, the fund owned just under 4 million shares in the firm. No activity was registered against this stock until the first quarter of 2026 when the fund disclosed that it had sold off the entire stake it owned in the payments company.

Mastercard Incorporated (NYSE:MA) kicked off the fiscal year with an earnings outperformance that underscored the sheer scalability of its business model. The firm delivered net revenues of $8.40 billion in Q1 2026, posting a 16% year-over-year increase that easily topped Wall Street projections.  Adjusted EPS skyrocketed 23% year-over-year to $4.60, up from $3.73 in Q1 2025, sailing past the consensus estimate of $4.41 to $4.53. The firm demonstrated incredible operating leverage, maintaining a 58% operating margin even while aggressively expanding strategic capital expenditure. Global cross-border volume surged 13%, fueled by a powerful mix of international travel recovery and cross-border digital merchant transactions.

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While we acknowledge the potential of MA as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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READ NEXT: Growth Stock Portfolio: 12 Stock Picks by Carl C. Icahn and Chris Rokos Stock Portfolio: Top 10 Stock Picks.

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Visa Inc. (NYSE:V) was one of the long-term holdings of Berkshire Hathaway for the past many years. The fund had first disclosed a stake in the company back in the third quarter of 2011. This position comprised a little over 9 million shares. In the next quarter, the fund grew this stake by 25% to 11.4 million shares. By mid-2012, this holding had been reduced by almost half to 6.2 million shares. From mid-2014 onwards, the fund started buying the stock again, growing the stake to around 10.5 million shares by 2016. By late 2021, the holding comprised a little over 8 million shares. No activity was registered against this stock until the first quarter of 2026, when the fund sold off this stake entirely.

READ MORE: 7 Best Lab-Grown Meat Stocks to Invest In.

Visa Inc. (NYSE:V) posted fiscal second quarter earnings in April, delivered operational metrics that completely dismantled macro-slowdown fears. The firm generated $11.2 billion in net revenue, marking a 17% year-over-year increase. Excluding the immediate post-pandemic recovery anomalies, this represents Visa’s strongest pure organic top-line growth rate since 2013. Adjusted EPS soared 20% year-over-year to $3.31, comfortably outstripping Wall Street consensus forecasts of $3.10. Visa successfully processed 66 billion transactions in just three months, a 9% year-over-year increase, translating to a massive $3.7 trillion in payments volume traveling across its proprietary network.

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While we acknowledge the potential of V as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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READ NEXT: Growth Stock Portfolio: 12 Stock Picks by Carl C. Icahn and Chris Rokos Stock Portfolio: Top 10 Stock Picks.

Disclosure: None. Follow Insider Monkey on Google News.

A peer-reviewed study titled “Democratisation of Retail Trading” analyzed 1.6 million posts from Reddit’s WallStreetBets community spanning from January 2018 to March 2022. The researchers compared these investment recommendations to over 16,000 recommendations made by analysts at the top 20 largest investment banks in the world. The study found that WallStreetBets’ average investment returns actually compete with and outperform the best investment banks in certain cases. The researchers looked specifically at S&P 500 stocks and identified the top 15% of best-performing companies during that time period. They discovered that WallStreetBets detected 27 of the 56 top-performing stocks, which ranked it competitively against major institutions despite being a free community.

For this article, we picked growth stocks that social media (Reddit, X, Stocktwist) is excited about. We chose them based on how frequently and seriously they were mentioned, and paid special attention to the reasons retail investors are giving for their 10x potential. With each stock, we have also mentioned its hedge fund sentiment.

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).

Photo by Adam Nowakowski on Unsplash

10. Sellas Life Sciences (NASDAQ:SLS)

Number of Hedge Fund Investors: 13

Sellas Life Sciences (NASDAQ:SLS) is one of the top favorite stocks social media believes can 10x. It is a biotech company developing a cancer immunotherapy drug called GPS — a treatment that works by training a patient’s own immune system to recognize and attack cancer cells, rather than using traditional chemotherapy. Sellas Life Sciences (NASDAQ:SLS) is currently testing GPS on acute myeloid leukemia, one of the most aggressive and deadly forms of blood cancer, in a large clinical trial called the REGAL trial.

Social media users call this one of the most compelling trial setups they have ever seen. Reddit is excited about this stock because it is not a traditional drug bet — it is a data science and modeling bet. One social media commenter holding 168,000 shares and 2,500 deep-in-the-money call options described it as “the strongest canon of due diligence I’ve ever found for a stock.”

Sellas Life Sciences’ (NASDAQ:SLS) growth catalyst is simple — a successful trial readout would almost certainly trigger a buyout from a major pharmaceutical company. Bulls believe the drug could become a standard of care for leukemia and potentially expand to other cancers, making it an extremely valuable acquisition target. Bears argue that 10x from the current price of around $8-9 is unrealistic, with most sober estimates pointing to a 3-5x return on a buyout rather than a moonshot.

9. Infleqtion Inc (NYSE:INFQ)

Number of Hedge Fund Investors: 24

Social media believes Infleqtion Inc (NYSE:INFQ) has the potential to 10x in the long term. Infleqtion is a quantum technology company that makes and sells quantum computers, quantum sensors, and quantum software. Its customers include the US Department of Defense, the US Navy, NASA, the UK government, and Nvidia. Its moat is its proprietary neutral-atom platform, which underpins both its computing and sensing products across defense, aerospace, and national security applications.

Infleqtion Inc (NYSE:INFQ) already sells equipment to the US military and has received a $100 million equity investment from the US government. Social media also frequently cites its Nvidia partnership as a key credibility signal.

What makes Infleqtion stand out among competitors is its neutral-atom technology. Infleqtion Inc (NYSE:INFQ) uses lasers to capture and hold atoms — specifically cesium or rubidium — in a restricted space, manipulating them as qubits. Unlike IonQ, which uses electrically charged ions, Infleqtion uses uncharged natural atoms. Because these atoms are identical by nature, they deliver higher fidelity and accuracy than synthetic alternatives. The tradeoff is speed — neutral atoms are slower than superconducting qubits used by IBM and Rigetti — but Infleqtion Inc (NYSE:INFQ) makes up for it with superior accuracy and the ability to operate at room temperature.

Photo by AlphaTradeZone

5. AeroVironment (NASDAQ:AVAV)

Number of Hedge Fund Investors: 37

AeroVironment (NASDAQ:AVAV) is a defense technology company that builds drones, counter-drone systems, precision strike weapons, and directed energy technologies for military customers. It sells to governments and armed forces, with 55 allied nations operating its platforms. Its moat is its position as the dominant supplier of UAS — unmanned aircraft systems — to the U.S. military, with decades of flight data, battlefield-tested hardware, and deep government relationships that are difficult for new entrants to replicate.

The bull case is built around the drone warfare megatrend. From the Middle East to Ukraine, drones have proven central to modern combat, and governments worldwide are now racing to build both offensive capability and drone defense. AeroVironment (NASDAQ:AVAV) is the top UAS supplier to the U.S. Department of War, which accounts for 35% of revenue, with total government exposure at 75% of sales — and that revenue is only likely to grow as militaries across the world come to terms with the importance of drone warfare. AeroVironment (NASDAQ:AVAV) has 53,000 platforms fielded and four million flight hours logged across 55 allied nations. The 2025 acquisition of BlueHalo for $4.1 billion expanded the company into space technology, counter-drone systems, and directed energy weapons like laser systems, broadening the addressable market significantly.

On June 18, Kelsey Berro, JPMorgan Asset Management Fixed Income Portfolio Manager, appeared on CNBC’s ‘Squawk Box’ to explain the market’s reaction to the Fed’s recent monetary policy decisions and the emergence of a new leadership regime under Chair Kevin Warsh. Berro noted that the bond market responded to the press conference with a significant move higher in the front end of the yield curve, even though the market had already priced in a rate hike. Conversely, the long end of the yield curve, specifically the 30-year yield, moved lower. She interpreted this as a sign that the market trusts the Fed’s credibility in fighting inflation, particularly as five-year inflation expectations have declined to levels below where they were at the start of the conflict in the Middle East. She emphasized that the bond market prefers a Fed that acts decisively rather than one that falls behind the curve as it did in 2022, which forced more aggressive hiking.

Regarding the new leadership, Berro noted that Warsh’s primary focus is clearly price stability, a stance consistent with his history and his association with figures like Stan Druckenmiller, who view price stability as the central bank’s sole mandate. During his press conference, Warsh avoided providing forward guidance and notably did not submit a dot to the Fed’s dot plot, making him a mystery on the committee where the other members are evenly split between hiking, holding, or cutting rates. However, Berro highlighted several Easter eggs from his comments, specifically his description of a cruel trade-off. Warsh does not believe the Fed must choose between fighting inflation and weakening the labor market. She suggested that if May marked the peak for inflation and if labor market growth moderates, the Fed might avoid further hikes.

Our Methodology

We used screeners to identify stocks trading below a forward P/E of 15 that have grown revenue by at least 20% over the past 3 years and have reported high TTM net income (at least $500 million) and TTM net income margin (at least 15%). We then limited our final selection to companies that have recently reported noteworthy developments likely to impact investor sentiment. These stocks are also popular among analysts and elite hedge funds. The stocks are ranked in ascending order of their net income.

Note: All data was sourced on June 19. 

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).

10 Most Profitable Undervalued Stocks to Invest In

10. Innoviva Inc. (NASDAQ:INVA)

TTM Net Income: $504 million

Innoviva Inc. (NASDAQ:INVA) is one of the most profitable undervalued stocks to invest in. On June 16, Innoviva Specialty Therapeutics entered an exclusive licensing and distribution agreement with Dr. Reddy’s Laboratories to bring XACDURO to South and Central America, the Caribbean, Russia, and the CIS region. The partnership aims to address a critical health challenge, as carbapenem-resistant Acinetobacter infection rates in these areas exceed 70%.

Under the deal, Dr. Reddy’s will manage the development, regulatory approval, and commercialization of the antibiotic within these territories. Innoviva retains rights in all other regions and is set to receive an upfront payment, along with milestone payments and tiered royalties based on future net sales.

XACDURO, which is FDA-approved for treating hospital-acquired and ventilator-associated bacterial pneumonia caused by Acinetobacter, is considered a vital tool against this “critical threat” pathogen. By using Dr. Reddy’s regional expertise, Innoviva Inc. (NASDAQ:INVA) intends to broaden global access to this specialized treatment while maintaining its strategic focus.

Innoviva Inc. (NASDAQ:INVA) is a diversified holding company that manages a portfolio of biopharmaceutical royalties and invests in, develops, and commercializes healthcare assets. Its core business focuses on royalties from respiratory products (RELVAR/BREO and ANORO ELLIPTA) partnered with GSK, alongside a specialized therapeutic platform, Innoviva Specialty Therapeutics, focused on critical care and infectious diseases.

9. UMB Financial Corporation (NASDAQ:UMBF)

TTM Net Income: $882 million

UMB Financial Corporation (NASDAQ:UMBF) is one of the most profitable undervalued stocks to invest in. On May 11, UMB Bank’s Institutional Custody division reached $250 billion in assets under custody as of March 31, marking a 19% year-over-year increase. Since becoming a standalone business in 2019, the division has experienced significant growth of 298%, driven by increased demand from municipal governments, insurance providers, and asset managers for specialized middle-office services.

Growth is fueled by the rising complexity of institutional portfolios, which now require advanced solutions like collateral management, risk monitoring, and treasury support. UMB has responded by expanding its service offerings, including new foreign exchange capabilities, collective investment trustee services, and integrated liquidity solutions such as committed reverse repo facilities and lines of credit.

The division’s success is highlighted by major partnerships, including providing custodial services for the City of Fort Worth and integrating custody and credit facilities for ReFlow Fund, LLC. Led by Amy Small, the team continues to invest in technology and process automation to maintain its momentum and adapt to the evolving needs of its institutional client base.

UMB Financial Corporation (NASDAQ:UMBF) is a financial services company, offering commercial banking, personal banking, and institutional banking products and services. The company serves business clients nationwide in the US and institutional clients in several countries.

5. RenaissanceRe Holdings Ltd. (NYSE:RNR)

TTM Net Income: $2.81 billion

RenaissanceRe Holdings Ltd. (NYSE:RNR) is one of the most profitable undervalued stocks to invest in. On May 14, RenaissanceRe Holdings announced that Chief Financial Officer Robert Qutub and Chief Portfolio Officer Ross Curtis will retire on December 31. To ensure a smooth transition, both executives will serve as strategic advisors to the company following their retirements.

Matthew Neuber, currently Senior Financial Officer and Corporate Treasurer, will succeed Qutub as CFO effective January 1, 2027. Neuber has been with RenaissanceRe since 2014 and has overseen capital management, financial planning, and forecasting during his tenure. Concurrently, Group Chief Underwriting Officer David Marra will assume the responsibilities currently held by Ross Curtis.

President and CEO Kevin O’Donnell thanked the outgoing executives for their long-term contributions, highlighting Qutub’s role in managing the company’s financial growth and acquisitions since 2016, and Curtis’s 27-year impact on the company’s underwriting culture and portfolio construction. The leadership changes reflect the firm’s ongoing commitment to succession planning and internal talent development.

RenaissanceRe Holdings Ltd. (NYSE:RNR) operates as a global provider of reinsurance and insurance, focusing on matching risk with capital. The company offers property, casualty, and specialty reinsurance, along with selected insurance solutions, mainly through intermediaries. It reports through two segments: Property and Casualty and Specialty.