7 Best Classifieds for February 2026
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Market Overview & Selection Criteria
In the current market environment, value investors seek stocks trading below their intrinsic value, supported by strong fundamentals like high ROIC, positive free cash flow, and revenue growth. ValueSense applies its proprietary methodology, screening thousands of stocks using machine learning-driven intrinsic value calculations, quality ratings, and key metrics such as ROIC, FCF margins, and debt levels. These 7 best stock picks were selected from ValueSense data for their potential undervaluation—where intrinsic value exceeds implied market pricing—balanced across consumer, technology, media, real estate, energy, luxury resale, and airlines sectors. Criteria emphasize quality ratings above 4.5, attractive intrinsic value upside, and diversified exposure to mitigate sector-specific volatility, providing educational analysis for retail investors building watchlists.
Featured Stock Analysis
Stock #1: Carvana Co. (CVNA)
| Metric | Value |
|---|---|
| Market Cap | $56.7B |
| Quality Rating | 7.2 |
| Intrinsic Value | $148.8 |
| 1Y Return | 64.4% |
| Revenue | $18.3B |
| Free Cash Flow | $546.0M |
| Revenue Growth | 45.5% |
| FCF margin | 3.0% |
| Gross margin | 20.9% |
| ROIC | 30.8% |
| Total Debt to Equity | 24.5% |
Investment Thesis
Carvana Co. (CVNA) stands out in the ValueSense analysis with a robust quality rating of 7.2, the highest in this watchlist, driven by impressive operational efficiency. The company reports a market cap of $56.7B, revenue of $18.3B, and explosive revenue growth of 45.5%, alongside positive free cash flow of $546.0M (FCF margin 3.0%). Its standout ROIC of 30.8% signals strong capital allocation in the online used-car retail space, while a gross margin of 20.9% reflects improving profitability. ValueSense estimates an intrinsic value of $148.8, suggesting significant undervaluation for long-term holders, especially with a 1Y return of 64.4% demonstrating momentum. Total debt to equity at 24.5% remains manageable, positioning CVNA as a growth leader in e-commerce automotive sales.
Key Catalysts
- Exceptional revenue growth at 45.5%, fueling scale in digital car sales.
- High ROIC of 30.8%, indicating efficient use of invested capital.
- Positive FCF generation $546.0M, supporting expansion without dilution.
- Strong 1Y return 64.4%, reflecting market recognition of turnaround.
Risk Factors
- Moderate debt levels (24.5% debt-to-equity) could pressure in high-interest environments.
- Low FCF margin 3.0% vulnerable to economic slowdowns in auto demand.
- Competitive online retail space may erode gross margins over time.
Stock #2: Garmin Ltd. (GRMN)
| Metric | Value |
|---|---|
| Market Cap | $38.8B |
| Quality Rating | 6.8 |
| Intrinsic Value | $202.7 |
| 1Y Return | -7.1% |
| Revenue | $6,943.1M |
| Free Cash Flow | $907.4M |
| Revenue Growth | 16.6% |
| FCF margin | 13.1% |
| Gross margin | 58.7% |
| ROIC | 30.4% |
| Total Debt to Equity | 1.8% |
Investment Thesis
Garmin Ltd. (GRMN), a leader in GPS and wearable technology, earns a solid quality rating of 6.8 from ValueSense, backed by a $38.8B market cap and revenue of $6,943.1M. Despite a 1Y return of -7.1%, the firm's intrinsic value of $202.7 points to undervaluation, supported by healthy free cash flow of $907.4M (FCF margin 13.1%) and revenue growth of 16.6%. Exceptional gross margin of 58.7% and ROIC of 30.4% highlight pricing power and efficiency in fitness, aviation, and marine segments. Minimal total debt to equity at 1.8% provides a strong balance sheet, making GRMN a defensive tech play with growth potential in consumer electronics.
Key Catalysts
- High FCF margin 13.1% and absolute FCF $907.4M for dividends or buybacks.
- Superior gross margin 58.7%, driven by premium product positioning.
- Strong ROIC 30.4%, signaling sustained profitability in niche markets.
- Low debt 1.8%, enabling resilience in volatile tech cycles.
Risk Factors
- Negative 1Y return -7.1% amid broader wearable market saturation.
- Revenue growth 16.6% may slow if consumer spending weakens.
- Dependence on fitness/aviation segments exposes to cyclical demand.
Stock #3: News Corporation (NWS)
| Metric | Value |
|---|---|
| Market Cap | $17.4B |
| Quality Rating | 6.1 |
| Intrinsic Value | $16.3 |
| 1Y Return | -1.6% |
| Revenue | $8,500.0M |
| Free Cash Flow | $606.0M |
| Revenue Growth | (16.4%) |
| FCF margin | 7.1% |
| Gross margin | 74.8% |
| ROIC | 6.8% |
| Total Debt to Equity | 30.7% |
Investment Thesis
News Corporation (NWS) features a quality rating of 6.1 in ValueSense data, with a $17.4B market cap and revenue of $8,500.0M. Though revenue growth is negative at 16.4%, positive free cash flow of $606.0M (FCF margin 7.1%) and a high gross margin of 74.8% underscore media asset strength. The intrinsic value of $16.3 indicates undervaluation, complemented by ROIC of 6.8% and a 1Y return of -1.6%. Total debt to equity at 30.7% is reasonable for the sector, positioning NWS for recovery in digital news and publishing amid advertising shifts.
Key Catalysts
- Elevated gross margin 74.8%, reflecting cost discipline in content.
- Solid FCF $606.0M, funding digital transitions.
- Stable ROIC 6.8% in a consolidating media landscape.
- Potential rebound from revenue dip via subscription growth.
Risk Factors
- Declining revenue (16.4%), tied to print media headwinds.
- Moderate debt 30.7% sensitive to ad market fluctuations.
- Flat 1Y return -1.6% signals ongoing digital disruption risks.
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Stock #4: Zillow Group, Inc. Class C (Z)
| Metric | Value |
|---|---|
| Market Cap | $15.3B |
| Quality Rating | 5.5 |
| Intrinsic Value | $103.5 |
| 1Y Return | -24.9% |
| Revenue | $2,483.0M |
| Free Cash Flow | $272.0M |
| Revenue Growth | 15.2% |
| FCF margin | 11.0% |
| Gross margin | 74.9% |
| ROIC | (2.5%) |
| Total Debt to Equity | 1.9% |
Investment Thesis
Zillow Group, Inc. Class C (Z) holds a quality rating of 5.5, with a $15.3B market cap and revenue of $2,483.0M growing at 15.2%. ValueSense pegs intrinsic value at $103.5, highlighting undervaluation despite a -24.9% 1Y return. Positive free cash flow of $272.0M (FCF margin 11.0%) and gross margin of 74.9% support its real estate platform dominance, though ROIC is negative at 2.5%. Low total debt to equity of 1.9% aids flexibility in housing market volatility.
Key Catalysts
- Revenue growth 15.2% from expanding real estate listings.
- Strong FCF margin 11.0% for tech investments.
- High gross margin 74.9%, leveraging network effects.
- Clean balance sheet (1.9% debt) for market recovery plays.
Risk Factors
- Negative ROIC (2.5%) from prior iBuying losses.
- Sharp 1Y decline -24.9% tied to housing slowdown.
- Platform dependency on mortgage rates and inventory.
Stock #5: TXNM Energy, Inc. (TXNM)
| Metric | Value |
|---|---|
| Market Cap | $5,463.8M |
| Quality Rating | 5.8 |
| Intrinsic Value | $81.4 |
| 1Y Return | 23.5% |
| Revenue | $2,109.3M |
| Free Cash Flow | ($555.8M) |
| Revenue Growth | 10.6% |
| FCF margin | (26.4%) |
| Gross margin | 56.4% |
| ROIC | 8.4% |
| Total Debt to Equity | (12.1%) |
Investment Thesis
TXNM Energy, Inc. (TXNM) scores a quality rating of 5.8, featuring a $5,463.8M market cap and $2,109.3M revenue with 10.6% growth. Intrinsic value of $81.4 suggests upside, backed by a 23.5% 1Y return and gross margin of 56.4%. Despite negative free cash flow of $555.8M (FCF margin -26.4%), ROIC of 8.4% indicates utility efficiency. Negative total debt to equity of 12.1% reflects strong equity position in energy distribution.
Key Catalysts
- Steady revenue growth 10.6% in regulated utilities.
- Positive ROIC 8.4% for infrastructure returns.
- Solid 1Y performance 23.5% amid energy demand.
- High gross margin 56.4% from stable operations.
Risk Factors
- Negative FCF ($555.8M), due to capex-heavy utility model.
- Low FCF margin -26.4% pressures in rising rate scenarios.
- Regulatory risks in energy sector pricing.
Stock #6: The RealReal, Inc. (REAL)
| Metric | Value |
|---|---|
| Market Cap | $4,304.0M |
| Quality Rating | 5.0 |
| Intrinsic Value | $0.7 |
| 1Y Return | 57.9% |
| Revenue | $662.8M |
| Free Cash Flow | ($11.5M) |
| Revenue Growth | 14.3% |
| FCF margin | (1.7%) |
| Gross margin | 74.5% |
| ROIC | (17.3%) |
| Total Debt to Equity | (121.6%) |
Investment Thesis
The RealReal, Inc. (REAL) has a quality rating of 5.0, with a $4,304.0M market cap and $662.8M revenue growing 14.3%. A 57.9% 1Y return contrasts with intrinsic value of $0.7, per ValueSense, alongside gross margin of 74.5%. Negative free cash flow of $11.5M (FCF margin -1.7%), ROIC of 17.3%, and total debt to equity of 121.6% highlight luxury resale challenges but growth potential.
Key Catalysts
- Revenue expansion 14.3% in authenticated luxury market.
- High gross margin 74.5% from premium consignment.
- Strong 1Y return 57.9% on e-commerce luxury trend.
- Platform scale for marketplace network effects.
Risk Factors
- Negative ROIC (17.3%) from scaling losses.
- Poor FCF ($11.5M) and margin -1.7%.
- High negative debt-to-equity (121.6%) signals leverage risks.
Stock #7: Frontier Group Holdings, Inc. (ULCC)
| Metric | Value |
|---|---|
| Market Cap | $1,088.4M |
| Quality Rating | 4.7 |
| Intrinsic Value | $12.8 |
| 1Y Return | -45.6% |
| Revenue | $3,729.0M |
| Free Cash Flow | ($85.0M) |
| Revenue Growth | 1.8% |
| FCF margin | (2.3%) |
| Gross margin | 25.2% |
| ROIC | (2.8%) |
| Total Debt to Equity | 0.0% |
Investment Thesis
Frontier Group Holdings, Inc. (ULCC) rates 4.7 in quality, with a $1,088.4M market cap and $3,729.0M revenue (1.8% growth). Intrinsic value of $12.8 indicates undervaluation despite -45.6% 1Y return. Gross margin of 25.2% supports low-cost airline model, with zero total debt to equity, though free cash flow is $85.0M (FCF margin -2.3%) and ROIC 2.8% reflect industry pressures.
Key Catalysts
- No debt 0.0%, providing financial flexibility.
- Revenue base $3,729.0M in budget travel demand.
- Gross margin 25.2% for cost-competitive operations.
- Potential recovery from travel rebound.
Risk Factors
- Steep 1Y loss -45.6% from fuel and capacity issues.
- Negative FCF ($85.0M) and ROIC (2.8%).
- Airline cyclicality tied to fuel prices and economy.
Portfolio Diversification Insights
This stock watchlist offers balanced exposure: CVNA and GRMN provide high-quality growth anchors (consumer/tech), NWS and Z add media/real estate stability, TXNM brings energy defensiveness, while REAL and ULCC offer speculative upside in luxury/airlines. Sector allocation—~30% consumer/tech, 25% real estate/media, 20% energy, 25% cyclical—reduces correlation risks; high-ROIC leaders like CVNA 30.8% complement FCF-positive names like GRMN. Pairing undervalued picks (e.g., GRMN's $202.7 intrinsic) with growth stories (CVNA's 45.5% revenue) enhances portfolio resilience, aligning with ValueSense's intrinsic value focus for diversified investment opportunities.
Market Timing & Entry Strategies
Consider entry on pullbacks to intrinsic value levels, such as CVNA near $148.8 or GRMN at $202.7, using ValueSense quality ratings for conviction. Monitor revenue growth and ROIC for momentum; dollar-cost average into high-conviction names like TXNM amid energy stability. Track FCF trends quarterly—positive shifts (e.g., GRMN's 13.1% margin) signal accumulation windows. Avoid chasing 1Y laggards like ULCC without debt/ROIC stabilization, framing positions as educational analysis for long-term watchlists.
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FAQ Section
How were these stocks selected?
These 7 best stock picks were curated using ValueSense's methodology, focusing on quality ratings, intrinsic value upside, ROIC, and FCF metrics from proprietary screening for undervalued opportunities across sectors.
What's the best stock from this list?
CVNA leads with the highest quality rating 7.2, top ROIC 30.8%, and 45.5% revenue growth, making it a standout for value stock analysis, though diversification is key.
Should I buy all these stocks or diversify?
Diversify across the watchlist's sectors (tech, energy, real estate) to balance risks like negative FCF in TXNM/REAL; use as educational content for portfolio construction.
What are the biggest risks with these picks?
Key concerns include negative FCF/ROIC in lower-rated stocks like REAL/ULCC, revenue declines (NWS), and sector cyclicality (airlines/energy), per ValueSense data.
When is the best time to invest in these stocks?
Target entries near intrinsic values (e.g., Z at $103.5) during market dips, monitoring catalysts like revenue growth and quarterly FCF for stock picks timing.