Why Upbound Group (UPBD) Could Be an Undervalued Stock to Watch

The FPA Queens Road Small Cap Value Fund, managed by investment firm First Pacific Advisors, highlighted Upbound Group (NASDAQ:UPBD) as a notable holding in its second-quarter 2026 investor letter. UPBD, a provider of consumer leasing and retail solutions, operates under brands such as Rent-A-Center and Acima, catering to sub-prime consumers seeking flexible payment options.

Despite the AI-driven rally, the fund maintained a bottom-up approach, avoiding beaten-down SaaS stocks due to the growing uncertainty surrounding AI-related outcomes. In Q2 2026, the fund trimmed $62 million in capital gains and $140 million year-to-date, ending the quarter with a cash position of 10.2%. The fund's top five holdings in Q2 2026 included Upbound Group (NASDAQ:UPBD), one of the company's most notable investments in 2026.

UPBD's stock is trading at less than five times earnings, offering a potentially undervalued opportunity. However, the fund expressed caution due to the company's leverage and concerns surrounding the Buy Now Pay Later segment.