Cheap stocks that could outperform next year include Lattice Semiconductor and Entergy , according to Wall Street investment bank Jefferies. As 2026 approaches, Jefferies believes that the market — which has been "very narrow" this year — should broaden out, driven by better earnings growth among small- and mid-cap stocks. More companies seeing earnings and sales growth rates accelerate may potentially lead to further upside. In the same note, Jefferies also highlighted a selection of small- and mid-size stocks it currently rates a buy that could see faster earnings and sales. "We looked for names below $55 billion [market cap with] improving earnings/sales growth rates in 2026, ranked relatively cheap on our GARP factor, while also having positive momentum using our 1-month change in 200-day moving average factor," the investment firm wrote, referring to "growth at a reasonable price." A few of the stocks from Jefferies' basket are highlighted below: One tech stock on the list was Lattice Semiconductor, up 24% this year. Jefferies' $85 price target implies the stock could rise another 21% from its Friday close. Lattice is a "compelling buy," the bank said, due to strong positions in both artificial intelligence and edge computing markets. As a result, Jefferies believes Lattice deserves its premium valuation compared to analog chip peers. "Upcoming catalysts include next-gen server deployments, continued hyperscaler investment and incremental share gains in mid-range FPGA markets," Jefferies wrote, referring to Field-Programmable Gate Array integrated circuits. "With execution strength, differentiated technology, and a clear roadmap for growth, Lattice remains one of our top [small- to midcap] picks in semiconductors." Entergy, up 29% in 2025, was also highlighted by Jefferies. The bank's $116 price target is approximately 19% above where the stock closed on Friday. "One of our top utility ideas with among the best exposure to data center growth, accelerating and enhancing an already leading profile, Entergy is a 100%-regulated Gulf Coast utility serving Louisiana, Arkansas, Texas, and Mississippi," the bank wrote. "The story is driven by data centers in the near term but has longer-term potential benefits from reshoring, LNG demand, and overall U.S. industrial revitalization." Jefferies added that Entergy's double-digit earnings per share growth is "unprecedented" among utilities. Other cheap stocks that could outperform next year include Signet Jewelers and Lincoln Electric , Jefferies said.
