7 Best Developer Tools for February 2026
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Market Overview & Selection Criteria
The developer tools sector within technology continues to show robust growth amid rising demand for software development infrastructure, cloud services, and AI-driven workflows. These 7 best developer tools stock picks were selected using ValueSense's proprietary intrinsic value methodology, focusing on companies with strong revenue growth, healthy free cash flow margins, and significant upside potential based on calculated intrinsic values compared to current market pricing. Criteria emphasize undervalued stocks in the developer ecosystem, including collaboration platforms, databases, DevOps tools, and cloud infrastructure providers. Stocks feature Quality ratings above 5.0, positive revenue trajectories (mostly 14-30% YoY), and high gross margins typical of SaaS models (60-88%). This watchlist targets retail investors seeking stock picks with diversification across market caps from $1.5B to $31B, prioritizing those trading below intrinsic value for potential long-term appreciation.
Featured Stock Analysis
Stock #1: Atlassian Corporation (TEAM)
| Metric | Value |
|---|---|
| Market Cap | $31.3B |
| Quality Rating | 5.7 |
| Intrinsic Value | $138.5 |
| 1Y Return | -55.7% |
| Revenue | $5,460.1M |
| Free Cash Flow | $1,442.1M |
| Revenue Growth | 19.5% |
| FCF margin | 26.4% |
| Gross margin | 82.9% |
| ROIC | (11.3%) |
| Total Debt to Equity | 88.9% |
Investment Thesis
Atlassian Corporation (TEAM) stands out in the developer tools space with a substantial market cap of $31.3B and a Quality rating of 5.7 from ValueSense analysis. The company generates impressive $5,460.1M in revenue, bolstered by 19.5% year-over-year growth and a robust 26.4% FCF margin from $1,442.1M in free cash flow. Its gross margin of 82.9% reflects strong pricing power in collaboration and project management software like Jira and Confluence. Despite a challenging 1Y return of -55.7% and negative ROIC of 11.3%, the intrinsic value of $138.5 suggests significant undervaluation, positioning TEAM as a core holding for investors analyzing TEAM stock analysis in growth-oriented portfolios. Total Debt to Equity at 88.9% is manageable for its scale, supporting sustained expansion in enterprise dev tools.
Key Catalysts
- Strong revenue growth of 19.5% signals expanding adoption in remote and hybrid work environments
- High FCF margin 26.4% and gross margin 82.9% enable reinvestment in AI-enhanced features
- Largest market cap $31.3B provides ecosystem leadership in developer collaboration tools
Risk Factors
- Negative ROIC -11.3% indicates capital efficiency challenges amid scaling
- Elevated Total Debt to Equity 88.9% could pressure finances in rising rate scenarios
- Recent 1Y return decline -55.7% reflects market volatility in tech growth stocks
Stock #2: MongoDB, Inc. (MDB)
| Metric | Value |
|---|---|
| Market Cap | $30.8B |
| Quality Rating | 6.0 |
| Intrinsic Value | $203.4 |
| 1Y Return | 37.0% |
| Revenue | $2,317.1M |
| Free Cash Flow | $358.4M |
| Revenue Growth | 20.9% |
| FCF margin | 15.5% |
| Gross margin | 71.6% |
| ROIC | (23.1%) |
| Total Debt to Equity | 1.2% |
Investment Thesis
MongoDB, Inc. (MDB) offers a compelling profile in the database segment of developer tools, with a $30.8B market cap and ValueSense Quality rating of 6.0. Revenue reached $2,317.1M, driven by 20.9% growth, while free cash flow of $358.4M yields a 15.5% FCF margin. The 71.6% gross margin underscores its NoSQL database strength for modern applications. A positive 1Y return of 37.0% contrasts with negative ROIC of 23.1%, but the $203.4 intrinsic value highlights undervaluation for MDB analysis. Low Total Debt to Equity of 1.2% enhances balance sheet flexibility, making MDB a standout for investors eyeing scalable cloud data solutions.
Key Catalysts
- Revenue growth of 20.9% fueled by Atlas cloud adoption and enterprise migrations
- Positive 1Y return 37.0% demonstrates market recognition of database innovation
- Minimal debt (1.2% Debt/Equity) supports aggressive R&D in AI and vector search
Risk Factors
- Negative ROIC -23.1% points to ongoing investments outpacing returns
- High market cap $30.8B may lead to valuation scrutiny in growth slowdowns
- FCF margin 15.5% lags peers, reflecting sales and marketing intensity
Stock #3: JFrog Ltd. (FROG)
| Metric | Value |
|---|---|
| Market Cap | $6,587.8M |
| Quality Rating | 6.6 |
| Intrinsic Value | $33.6 |
| 1Y Return | 55.0% |
| Revenue | $502.6M |
| Free Cash Flow | $140.9M |
| Revenue Growth | 22.7% |
| FCF margin | 28.0% |
| Gross margin | 75.7% |
| ROIC | (19.8%) |
| Total Debt to Equity | 1.3% |
Investment Thesis
JFrog Ltd. (FROG), a DevOps platform leader, boasts a $6,587.8M market cap and top-tier Quality rating of 6.6. With $502.6M revenue growing 22.7% and $140.9M free cash flow at 28.0% margin, it exemplifies efficient scaling. Gross margin of 75.7% supports its Artifactory and Xray tools for software supply chain security. The 55.0% 1Y return is impressive, though ROIC at 19.8% shows growth investments; intrinsic value of $33.6 indicates upside in FROG stock picks. Near-zero Total Debt to Equity 1.3% minimizes financial risk.
Key Catalysts
- Highest 1Y return 55.0% driven by DevSecOps demand in regulated industries
- Superior FCF margin 28.0% and revenue growth 22.7% for mid-cap agility
- Strong Quality rating 6.6 reflects platform stickiness in CI/CD pipelines
Risk Factors
- Negative ROIC -19.8% due to R&D spend on security features
- Smaller revenue base $502.6M vulnerable to competition from incumbents
- Mid-cap size $6.6B exposes to sector rotations
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Stock #4: GitLab Inc. (GTLB)
| Metric | Value |
|---|---|
| Market Cap | $5,851.9M |
| Quality Rating | 5.3 |
| Intrinsic Value | $41.5 |
| 1Y Return | -49.6% |
| Revenue | $906.3M |
| Free Cash Flow | $242.3M |
| Revenue Growth | 27.4% |
| FCF margin | 26.7% |
| Gross margin | 88.0% |
| ROIC | (31.5%) |
| Total Debt to Equity | 0.0% |
Investment Thesis
GitLab Inc. (GTLB) provides an all-in-one DevOps platform with a $5,851.9M market cap and Quality rating of 5.3. Revenue of $906.3M grew 27.4%, generating $242.3M free cash flow at 26.7% margin and 88.0% gross margin—among the highest here. Despite -49.6% 1Y return and 31.5% ROIC, zero Total Debt to Equity and $41.5 intrinsic value signal recovery potential for GTLB analysis in open-source dev tools.
Key Catalysts
- Fastest revenue growth 27.4% from GitLab Duo AI and enterprise wins
- Exceptional gross margin 88.0% and debt-free balance sheet 0.0%
- High FCF margin 26.7% funds self-hosted to SaaS transitions
Risk Factors
- Lowest Quality rating 5.3 and steep 1Y decline -49.6%
- Deep negative ROIC -31.5% from platform expansion costs
- Competition in crowded DevOps market
Stock #5: DigitalOcean Holdings, Inc. (DOCN)
| Metric | Value |
|---|---|
| Market Cap | $5,048.3M |
| Quality Rating | 6.8 |
| Intrinsic Value | $78.0 |
| 1Y Return | 32.5% |
| Revenue | $864.0M |
| Free Cash Flow | $276.5M |
| Revenue Growth | 14.2% |
| FCF margin | 32.0% |
| Gross margin | 60.6% |
| ROIC | 6.4% |
| Total Debt to Equity | (474.7%) |
Investment Thesis
DigitalOcean Holdings, Inc. (DOCN) targets developer cloud infrastructure with $5,048.3M market cap and leading Quality rating of 6.8. Revenue of $864.0M grew 14.2%, with standout $276.5M free cash flow (32.0% margin) and positive ROIC of 6.4%. Intrinsic value of $78.0 vs. 32.5% 1Y return positions it strongly, despite negative Total Debt to Equity of 474.7% from cash holdings; ideal for DOCN investment opportunities.
Key Catalysts
- Highest Quality rating 6.8 and FCF margin 32.0% in the group
- Positive ROIC 6.4% shows capital efficiency in SMB cloud
- Solid 1Y return 32.5% amid developer-friendly pricing
Risk Factors
- Negative Debt/Equity -474.7% reflects unique cash position but liquidity quirks
- Slower revenue growth 14.2% vs. pure software peers
- Competition from AWS hyperscalers
Stock #6: Progress Software Corporation (PRGS)
| Metric | Value |
|---|---|
| Market Cap | $1,734.9M |
| Quality Rating | 5.9 |
| Intrinsic Value | $132.9 |
| 1Y Return | -28.2% |
| Revenue | $977.8M |
| Free Cash Flow | $229.5M |
| Revenue Growth | 29.8% |
| FCF margin | 23.5% |
| Gross margin | 80.8% |
| ROIC | 6.7% |
| Total Debt to Equity | 177.9% |
Investment Thesis
Progress Software Corporation (PRGS) delivers enterprise dev tools with $1,734.9M market cap and Quality rating of 5.9. Revenue hit $977.8M (29.8% growth), with $229.5M FCF (23.5% margin) and 80.8% gross margin. Positive ROIC 6.7% and $132.9 intrinsic value outweigh -28.2% 1Y return and 177.9% Debt/Equity, offering value in PRGS analysis.
Key Catalysts
- Top revenue growth 29.8% from OpenEdge and Kemp expansions
- Positive ROIC 6.7% indicates mature profitability
- Strong FCF (23.5% margin) for acquisitions
Risk Factors
- High Debt/Equity 177.9% amid integration risks
- Negative 1Y return -28.2% from market pressures
- Smaller cap exposes to M&A volatility
Stock #7: C3.ai, Inc. (AI)
| Metric | Value |
|---|---|
| Market Cap | $1,571.8M |
| Quality Rating | 6.0 |
| Intrinsic Value | $14.2 |
| 1Y Return | -65.6% |
| Revenue | $352.9M |
| Free Cash Flow | ($93.2M) |
| Revenue Growth | 1.8% |
| FCF margin | (26.4%) |
| Gross margin | 51.8% |
| ROIC | (234.5%) |
| Total Debt to Equity | 0.0% |
Investment Thesis
C3.ai, Inc. (AI) focuses on enterprise AI dev tools with $1,571.8M market cap and Quality rating of 6.0. Revenue of $352.9M grew modestly at 1.8%, but negative FCF (-$93.2M, -26.4% margin) and extreme ROIC -234.5% highlight early-stage risks. Zero Debt/Equity aids runway, with $14.2 intrinsic value for speculative AI stock watchlist plays despite -65.6% 1Y return.
Key Catalysts
- Debt-free 0.0% supports AI R&D investments
- Quality rating 6.0 in high-growth AI theme
- Potential from generative AI tailwinds
Risk Factors
- Negative FCF (-26.4% margin) and ROIC -234.5% signal cash burn
- Weakest growth 1.8% and steep 1Y drop -65.6%
- Lowest gross margin 51.8% in group
Portfolio Diversification Insights
These developer tools stock picks create a balanced portfolio across subsectors: collaboration (TEAM), databases (MDB), DevOps (FROG, GTLB), cloud infra (DOCN), enterprise software (PRGS), and AI (AI). Large-caps (TEAM, MDB) provide stability (avg. Quality 5.85), mid/small-caps (FROG-DOCN, PRGS-AI) add growth alpha with higher ratings (avg. 6.3). Sector allocation is 100% tech/dev tools, reducing single-stock risk via complementary ecosystems—e.g., MDB databases pair with GTLB CI/CD. Revenue growth averages ~19.3%, FCF-positive for 6/7, but blend high-flyers (FROG 55% 1Y) with recoverers (TEAM -55.7%) for volatility mitigation. Intrinsic values suggest 2-5x upside potential group-wide.
Market Timing & Entry Strategies
Consider entry on pullbacks to 20-30% below intrinsic values, such as TEAM near $138.5 or DOCN at $78.0, amid tech sector rotations. Monitor Q4 earnings for revenue beats (target >20% YoY) and FCF inflection. Dollar-cost average into top Quality picks (DOCN 6.8, FROG 6.6) during market dips, scaling positions as ROIC improves from negative to positive. Watch developer adoption metrics like GitHub stars or cloud spend data for confirmation.
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FAQ Section
How were these stocks selected?
These 7 best stock picks were chosen via ValueSense intrinsic value tools, prioritizing Quality ratings >5.0, revenue growth >14%, high FCF margins, and trading below calculated intrinsic values in the developer tools sector.
What's the best stock from this list?
DigitalOcean (DOCN) leads with the highest Quality rating 6.8, positive ROIC 6.4%, and top FCF margin 32.0%, making it a standout for investment opportunities in cloud dev tools.
Should I buy all these stocks or diversify?
Diversify across the list for balanced exposure—allocate 20-30% to large-caps (TEAM, MDB) for stability and 10-15% to high-growth mid-caps (FROG, GTLB)—to optimize stock watchlist risk-return.
What are the biggest risks with these picks?
Key risks include negative ROIC across most (avg. -73%), high debt in some (TEAM 88.9%, PRGS 177.9%), and 1Y volatility (range -65.6% to +55%), amplified by tech sector sensitivity.
When is the best time to invest in these stocks?
Target entries on 10-20% dips from peaks, post-earnings confirmation of growth, or when prices approach intrinsic values like MDB $203.4—ideal during broader market corrections for developer tools stock picks.