Zacks Investment Research identifies top stocks for potential upside

Zacks Investment Research identifies top stocks for potential upside

Recent market volatility and shifts in trade have created a diverse set of opportunities for investors to look beyond high-profile names like NVIDIA, Google, and Meta. According to Zacks Equity Research, professional and institutional investors are increasingly searching for stocks ripe for purchase regardless of company size or industry renown.

To identify these opportunities, Zacks utilizes a proprietary short-term rating system, the Zacks Rank, which classifies stocks into five groups from Strong Buy to Strong Sell based on four factors related to earnings estimates. This system serves as a timeliness indicator for a period of 1 to 3 months. Historical data shows a tiered performance gap: Strong Buy stocks have an annualized return of 23.94%, while Buy stocks return 18.19%. By comparison, the S&P 500 averages 11.60%.

Top Rated Stocks for Recovery and Growth

Zacks has identified several "Strong Buy" stocks with high potential for upside, utilizing complementary Style Scores (Value, Growth, and Momentum) and the Expected Surprise Prediction (ESP) to forecast positive earnings surprises.

• Delek US (DK): A downstream energy company specializing in refining, logistics, and renewable fuels. The company saw a sharp rise in adjusted EBITDA in first-quarter 2026, aided by improved benchmark crack spreads. It currently holds a Zacks Rank #1 and carries an "A" grade in Value, Growth, and Momentum scores. However, the stock faces risks from higher crude costs, unplanned outages, and weaker driving demand.
• Hewlett Packard Enterprise (HPE): This provider of hybrid-cloud infrastructure and servers reported record revenue, gross margin, and non-GAAP EPS in fiscal second-quarter 2026. The company is leveraging AI demand and the Juniper combination to reduce reliance on servers. While it holds a Zacks Rank #1, risks include lumpy AI orders and competition from Dell and Lenovo.
• Cognex (CGNX): A machine-vision company focusing on warehouse and factory automation. First-quarter 2026 showed rises in revenue, operating income, and adjusted EPS. Despite a Zacks Rank #1, it carries an "F" Value Score, suggesting valuation risks following a rebound from a long trough.
• Etsy (ETSY): The online marketplace for handmade and vintage goods has pivoted toward its core marketplace after agreeing to sell Depop. First-quarter 2026 saw revenue growth and the first sequential active-buyer growth in two years. It maintains a Zacks Rank #1, though its "D" Value Score indicates a recovery-oriented setup rather than a valuation-led one.

Broader Market Trends and Sector Analysis

Beyond individual ratings, Zacks employs an Industry Rank across 265 expanded industries and a Sector Rank across 16 sectors. The top 1% of these ranks are reserved for those with the highest percentage of Rank #1 and #2 stocks.

Outside of the Zacks framework, other analysts have identified significant upside in various global markets. In India, brokerage firms are bullish on several sectors:

• Hindustan Copper Limited (HCL): Anand Rathi issued a "buy" rating with a target price of Rs 715, suggesting a potential upside of 45.5%.
• Tata Motors Ltd: Emkay Global Financial Services set a target price of Rs 600, indicating a 38.9% potential upside.
• Sobha Ltd: This real estate developer has a target price of Rs 1900 from Emkay Global Financial Services, a potential 34.9% increase.
• Persistent Systems Ltd: Motilal Oswal suggests a target of Rs 6,200, reflecting a 28% upside.
• Waaree Energies Ltd: This solar module manufacturer has a Motilal Oswal target of Rs 3,825, an upside of 27.1%.