5 Best Iot for February 2026
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Market Overview & Selection Criteria
The IoT sector continues to drive innovation in connectivity and data solutions, with growing demand for smart devices and industrial applications amid a recovering tech market. Value Sense selected these 5 best IoT stock picks using its proprietary machine learning-driven analysis, focusing on companies showing potential undervaluation based on intrinsic value estimates compared to market caps, alongside quality ratings, ROIC, FCF margins, and revenue growth. Criteria emphasize undervalued stocks with solid gross margins and manageable debt, drawn from curated watchlists like IoT themes, prioritizing those with positive FCF generation or growth trajectories for long-term value analysis.
Featured Stock Analysis
Stock #1: Impinj, Inc. (PI)
| Metric | Value |
|---|---|
| Market Cap | $4,194.6M |
| Quality Rating | 5.5 |
| Intrinsic Value | $50.2 |
| 1Y Return | 7.9% |
| Revenue | $359.8M |
| Free Cash Flow | $40.8M |
| Revenue Growth | 4.2% |
| FCF margin | 11.3% |
| Gross margin | 52.2% |
| ROIC | (0.7%) |
| Total Debt to Equity | 147.5% |
Investment Thesis
Impinj, Inc. (PI) stands out in the IoT space with a market cap of $4,194.6M and a Quality rating of 5.5 from Value Sense analysis. Its intrinsic value is estimated at $50.2, suggesting potential undervaluation for value-focused investors examining fundamentals. The company reports revenue of $359.8M, supported by $40.8M in free cash flow (FCF) and an FCF margin of 11.3%, alongside a gross margin of 52.2%. Despite modest revenue growth of 4.2% and a 1Y return of 7.9%, the metrics highlight operational efficiency in RFID and connectivity solutions, positioning PI as an educational case for IoT exposure with balanced financial health.
Key Catalysts
- Strong gross margin of 52.2% indicating robust pricing power in IoT hardware.
- Positive FCF of $40.8M, providing flexibility for R&D in expanding IoT applications.
- Intrinsic value of $50.2 points to upside potential relative to current positioning.
Risk Factors
- Negative ROIC of 0.7%, signaling challenges in capital efficiency.
- High Total Debt to Equity of 147.5%, increasing financial leverage risks.
- Modest revenue growth of 4.2%, vulnerable to sector slowdowns.
Stock #2: Digi International Inc. (DGII)
| Metric | Value |
|---|---|
| Market Cap | $1,607.8M |
| Quality Rating | 7.2 |
| Intrinsic Value | $35.4 |
| 1Y Return | 39.0% |
| Revenue | $430.2M |
| Free Cash Flow | $108.5M |
| Revenue Growth | 1.5% |
| FCF margin | 25.2% |
| Gross margin | 62.9% |
| ROIC | 12.3% |
| Total Debt to Equity | 25.0% |
Investment Thesis
Digi International Inc. (DGII) demonstrates strong fundamentals in IoT connectivity, boasting a $1,607.8M market cap and a superior Quality rating of 7.2. Value Sense pegs its intrinsic value at $35.4, underscoring undervaluation potential amid a solid 39.0% 1Y return. Revenue stands at $430.2M with impressive $108.5M FCF and a 25.2% FCF margin, complemented by a 62.9% gross margin and positive 12.3% ROIC. Though revenue growth is 1.5%, these metrics position DGII as a standout for analysis in stable IoT infrastructure plays, offering educational insights into high-margin operations and capital returns.
Key Catalysts
- Exceptional Quality rating of 7.2, highest in this watchlist for reliability.
- High FCF margin of 25.2% and $108.5M FCF supporting sustained growth.
- Strong ROIC of 12.3% and gross margin 62.9% for competitive edge.
Risk Factors
- Low revenue growth of 1.5%, potentially limiting near-term expansion.
- Moderate Total Debt to Equity of 25.0%, though manageable, warrants monitoring.
Stock #3: PAR Technology Corporation (PAR)
| Metric | Value |
|---|---|
| Market Cap | $1,075.6M |
| Quality Rating | 5.0 |
| Intrinsic Value | $58.3 |
| 1Y Return | -64.1% |
| Revenue | $440.5M |
| Free Cash Flow | ($16.6M) |
| Revenue Growth | 13.5% |
| FCF margin | (3.8%) |
| Gross margin | 43.9% |
| ROIC | (6.8%) |
| Total Debt to Equity | 48.0% |
Investment Thesis
PAR Technology Corporation (PAR) operates in IoT-enabled restaurant tech, with a $1,075.6M market cap and Quality rating of 5.0. Its intrinsic value of $58.3 suggests significant undervaluation per Value Sense tools, despite a challenging -64.1% 1Y return. Revenue growth shines at 13.5% to $440.5M, but FCF is negative at $16.6M with a -3.8% margin and -6.8% ROIC, offset by a 43.9% gross margin and 48.0% Total Debt to Equity. This profile offers analytical depth on growth-stage IoT firms investing heavily for future scalability.
Key Catalysts
- Robust revenue growth of 13.5%, signaling demand in hospitality IoT.
- Intrinsic value of $58.3, highlighting potential recovery upside.
- Decent gross margin of 43.9% for operational scalability.
Risk Factors
- Negative FCF of $16.6M and -3.8% margin, indicating cash burn.
- Poor ROIC of -6.8% and weak 1Y return -64.1%.
- Total Debt to Equity 48.0% adds balance sheet pressure.
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Stock #4: Orion Group Holdings, Inc. (ORN)
| Metric | Value |
|---|---|
| Market Cap | $476.2M |
| Quality Rating | 5.0 |
| Intrinsic Value | $13.8 |
| 1Y Return | 51.2% |
| Revenue | $835.9M |
| Free Cash Flow | ($1,334.0K) |
| Revenue Growth | 7.0% |
| FCF margin | (0.2%) |
| Gross margin | 13.1% |
| ROIC | 8.5% |
| Total Debt to Equity | 27.2% |
Investment Thesis
Orion Group Holdings, Inc. (ORN) brings construction IoT elements with a $476.2M market cap and Quality rating of 5.0. Intrinsic value at $13.8 points to undervaluation, backed by a strong 51.2% 1Y return and 7.0% revenue growth to $835.9M. FCF is slightly negative at $1,334.0K with -0.2% margin, but 13.1% gross margin, 8.5% ROIC, and 27.2% Total Debt to Equity provide a balanced view for educational analysis in industrial IoT applications.
Key Catalysts
- Impressive 1Y return of 51.2%, showing market momentum.
- Positive ROIC of 8.5% amid revenue growth 7.0%.
- Intrinsic value $13.8 for value-oriented IoT diversification.
Risk Factors
- Near-zero FCF $1,334.0K and -0.2% margin.
- Low gross margin of 13.1%, sensitive to cost pressures.
Stock #5: Lantronix, Inc. (LTRX)
| Metric | Value |
|---|---|
| Market Cap | $262.4M |
| Quality Rating | 5.6 |
| Intrinsic Value | $4.8 |
| 1Y Return | 71.6% |
| Revenue | $118.3M |
| Free Cash Flow | $7,805.0K |
| Revenue Growth | (26.9%) |
| FCF margin | 6.6% |
| Gross margin | 42.7% |
| ROIC | (11.7%) |
| Total Debt to Equity | 14.3% |
Investment Thesis
Lantronix, Inc. (LTRX) rounds out this IoT watchlist with a $262.4M market cap and Quality rating of 5.6. Its intrinsic value of $4.8 contrasts with a stellar 71.6% 1Y return, despite -26.9% revenue decline to $118.3M. Positive $7,805.0K FCF and 6.6% margin, 42.7% gross margin, and low 14.3% Total Debt to Equity offset -11.7% ROIC, making it a compelling case for turnaround analysis in edge computing IoT.
Key Catalysts
- Highest 1Y return 71.6%, indicating strong investor interest.
- Positive FCF $7,805.0K with 6.6% margin resilience.
- Low Total Debt to Equity 14.3% for financial stability.
Risk Factors
- Sharp revenue drop of -26.9%, raising growth concerns.
- Negative ROIC -11.7%, reflecting capital inefficiencies.
Portfolio Diversification Insights
These 5 IoT stock picks—PI, DGII, PAR, ORN, and LTRX—offer diversification across IoT subsectors like RFID/connectivity (PI, DGII), restaurant tech (PAR), industrial construction (ORN), and edge devices (LTRX), reducing single-stock risk. Sector allocation leans heavily toward technology (80%+), with DGII's top Quality rating 7.2 anchoring stability, complemented by high-return plays like LTRX (71.6% 1Y) and ORN 51.2%. Cross-referencing shows complementary strengths: DGII's high ROIC 12.3% balances PI's debt load 147.5%, while PAR's growth 13.5% pairs with LTRX's FCF positivity, creating a watchlist for balanced undervalued IoT stocks.
Market Timing & Entry Strategies
Consider entry during IoT sector dips, such as post-earnings volatility or broader tech pullbacks, monitoring intrinsic value gaps (e.g., PAR at $58.3, PI at $50.2). Use Value Sense screeners for ROIC >8% (like ORN, DGII) and FCF positivity, averaging in on 1Y outperformers like LTRX amid revenue recovery signals. Track macroeconomic IoT tailwinds like 5G expansion for optimal positioning in these top stocks to buy now.
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FAQ Section
How were these stocks selected?
These 5 best IoT stock picks were curated via Value Sense's machine learning tools, prioritizing intrinsic value upside, Quality ratings (e.g., DGII's 7.2), FCF margins, and IoT-themed watchlists for undervalued opportunities.
What's the best stock from this list?
Digi International (DGII) leads with the highest Quality rating of 7.2, strong 12.3% ROIC, 25.2% FCF margin, and 39.0% 1Y return, making it a top analytical choice in this collection.
Should I buy all these stocks or diversify?
Diversification across these IoT names—like pairing DGII's stability with LTRX's growth—enhances portfolio balance; analyze via Value Sense for personalized allocation rather than uniform exposure.
What are the biggest risks with these picks?
Key concerns include high debt (PI at 147.5%), negative FCF (PAR, ORN), revenue declines (LTRX), and ROIC issues, emphasizing the need for ongoing fundamental monitoring.
When is the best time to invest in these stocks?
Optimal timing aligns with intrinsic value discounts widening (e.g., PAR's $58.3), positive revenue inflection, or IoT market catalysts, using Value Sense backtesting for historical strategy validation.