Affordable stocks are expected to perform well in 2026, according to Jefferies.

Potentially Undervalued Stocks for 2026

According to the investment bank Jefferies, Lattice Semiconductor and Entergy are among the undervalued stocks that have the potential to perform well next year. As we approach 2026, Jefferies anticipates that the current “very narrow” market will broaden, thanks to improved earnings growth in small and mid-cap stocks. If a greater number of companies can accelerate their earnings and sales growth, we might see even more upside.

In their analysis, Jefferies spotlighted several small- and mid-cap stocks that they currently rate as buys, suggesting that these stocks could experience significant growth in earnings and sales. They mentioned that they focused on companies with market caps under $55 billion. They noted, “Earnings and sales growth in 2026 is improving, and while it ranks relatively cheap based on our GARP factor, there’s positive momentum indicated by the one-month change in the 200-day moving average.” This speaks to their strategy of looking for growth at a reasonable price.

One highlighted tech stock is Lattice Semiconductor, which has seen a 24% increase this year. Jefferies has set a price target of $85, indicating potential for further growth. They describe Lattice as an “attractive buy,” emphasizing its strong position in both the artificial intelligence and edge computing sectors.

They also brought attention to Entergy, projecting a 29% rise in 2025. Their price target of $116 sits about 19% above the stock’s closing value on Friday. Jefferies considers Entergy one of their top utility picks, noting its significant exposure to data center growth. “In the short term, this narrative is heavily influenced by data centers, but looking ahead, there are promising prospects from reshoring, LNG demand, and a broader revitalization of U.S. industry,” they mentioned, highlighting Entergy’s impressive double-digit earnings per share growth, which is quite remarkable for power companies.