9 Best Public Sector Non Profit Software for February 2026
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Market Overview & Selection Criteria
The current market environment presents compelling opportunities for value-focused investors seeking undervalued stocks with strong fundamentals and growth potential. Our selection methodology prioritizes companies demonstrating exceptional free cash flow generation, sustainable revenue growth, and attractive intrinsic value positioning relative to current market prices.[1] These eight stocks represent a diversified watchlist spanning enterprise software, infrastructure, technology, and consumer goods sectors—each selected based on ValueSense's proprietary quality ratings and fundamental analysis.
The stocks featured in this analysis showcase varying risk-return profiles, allowing investors to construct portfolios aligned with their individual risk tolerance and investment horizons. By examining quality metrics, cash flow efficiency, and growth trajectories, we identify opportunities where market sentiment may not fully reflect underlying business strength.
Featured Stock Analysis
Stock #1: Palantir Technologies Inc. (PLTR)
| Metric | Value |
|---|---|
| Market Cap | $349.5B |
| Quality Rating | 8.1 |
| Intrinsic Value | $20.3 |
| 1Y Return | 80.5% |
| Revenue | $3,896.2M |
| Free Cash Flow | $1,794.8M |
| Revenue Growth | 47.2% |
| FCF margin | 46.1% |
| Gross margin | 80.8% |
| ROIC | 76.6% |
| Total Debt to Equity | 3.5% |
Investment Thesis
Palantir Technologies stands out as the highest-quality stock in this collection with a ValueSense quality rating of 8.1, reflecting exceptional operational metrics and business fundamentals. The company has delivered remarkable 80.5% one-year returns, demonstrating strong market recognition of its value proposition. With a market cap of $349.5B, Palantir commands a significant position in the enterprise software and data analytics space, serving government and commercial clients with mission-critical intelligence platforms.
The company's financial profile is exceptionally strong, characterized by 80.8% gross margins and an outstanding 76.6% return on invested capital (ROIC)—metrics that underscore pricing power and capital efficiency. Revenue growth of 47.2% combined with a 46.1% free cash flow margin reveals a business model that converts top-line growth directly into shareholder value. With minimal leverage (3.5% debt-to-equity ratio), Palantir maintains financial flexibility for strategic investments and shareholder returns.
Key Catalysts
- Accelerating government contract expansion and renewal cycles
- Commercial segment penetration and customer diversification
- AI-powered analytics platform enhancements driving competitive moat
- Potential margin expansion as scale increases
- Strategic partnerships in emerging technology domains
Risk Factors
- Valuation premium relative to broader software sector multiples
- Concentration risk in government contracts and customer base
- Competitive pressure from larger cloud and analytics platforms
- Regulatory scrutiny on data privacy and government technology partnerships
- Execution risk on commercial segment growth targets
Stock #2: ONEOK, Inc. (OKE)
| Metric | Value |
|---|---|
| Market Cap | $49.3B |
| Quality Rating | 6.1 |
| Intrinsic Value | $185.1 |
| 1Y Return | -19.9% |
| Revenue | $31.6B |
| Free Cash Flow | $5,102.0M |
| Revenue Growth | 58.8% |
| FCF margin | 16.2% |
| Gross margin | 21.3% |
| ROIC | 7.6% |
| Total Debt to Equity | 2.6% |
Investment Thesis
ONEOK represents a diversified midstream energy infrastructure play with substantial free cash flow generation capabilities. Despite a -19.9% one-year return, the company's fundamentals suggest potential mean reversion opportunity. With $49.3B in market capitalization and $31.6B in annual revenue, ONEOK operates critical natural gas and crude oil transportation and storage infrastructure serving North American energy markets.
The investment case centers on ONEOK's $5.1B in annual free cash flow—the highest absolute FCF among all featured stocks—and robust 58.8% revenue growth. This growth trajectory reflects both operational expansion and favorable energy market dynamics. The company maintains a conservative capital structure with 2.6% debt-to-equity ratio, providing downside protection and financial stability through commodity price cycles. A 16.2% FCF margin demonstrates the cash-generative nature of midstream infrastructure assets.
Key Catalysts
- Natural gas demand recovery and LNG export growth
- Crude oil transportation volume increases
- Strategic infrastructure expansion projects completion
- Potential dividend growth and shareholder return acceleration
- Energy transition infrastructure investments
Risk Factors
- Commodity price volatility and energy market cyclicality
- Regulatory changes affecting pipeline operations and tariffs
- Energy transition risks and long-term demand uncertainty
- Execution risk on capital projects and expansion initiatives
- Geopolitical factors affecting energy markets
Stock #3: Constellation Brands, Inc. (STZ)
| Metric | Value |
|---|---|
| Market Cap | $27.1B |
| Quality Rating | 6.1 |
| Intrinsic Value | $61.5 |
| 1Y Return | -14.5% |
| Revenue | $9,382.5M |
| Free Cash Flow | $432.4M |
| Revenue Growth | (7.9%) |
| FCF margin | 4.6% |
| Gross margin | 52.0% |
| ROIC | 19.6% |
| Total Debt to Equity | 133.3% |
Investment Thesis
Constellation Brands operates as a leading beverage alcohol company with significant market presence in beer, wine, and spirits categories. The company's 19.6% ROIC demonstrates efficient capital deployment despite recent headwinds. With $27.1B market capitalization and $9.4B in annual revenue, STZ maintains strong brand portfolios including Corona, Modelo, and Robert Mondavi wines—brands with substantial pricing power and consumer loyalty.
While the company faces near-term challenges reflected in -7.9% revenue growth and -14.5% one-year returns, the 52% gross margin and established market position provide foundation for recovery. The intrinsic value estimate of $61.5 suggests potential upside from current levels. STZ's business model benefits from premium product positioning and geographic diversification across North American and international markets.
Key Catalysts
- Premium beer segment recovery and market share stabilization
- International expansion and emerging market penetration
- Operational efficiency improvements and cost management
- Potential M&A opportunities in spirits or premium beverage categories
- Brand innovation and product line extensions
Risk Factors
- Declining beer consumption trends in developed markets
- Elevated debt levels (133.3% debt-to-equity) limiting financial flexibility
- Competitive intensity in premium beverage segments
- Regulatory changes affecting alcohol marketing and distribution
- Consumer preference shifts toward non-alcoholic and health-focused beverages
Stock #4: Tyler Technologies, Inc. (TYL)
| Metric | Value |
|---|---|
| Market Cap | $15.9B |
| Quality Rating | 6.2 |
| Intrinsic Value | $539.9 |
| 1Y Return | -38.3% |
| Revenue | $2,298.3M |
| Free Cash Flow | $618.9M |
| Revenue Growth | 10.6% |
| FCF margin | 26.9% |
| Gross margin | 44.8% |
| ROIC | 7.0% |
| Total Debt to Equity | 18.7% |
Investment Thesis
Tyler Technologies represents a specialized enterprise software provider serving public sector and financial services markets with mission-critical solutions. The company's quality rating of 6.2 reflects solid operational fundamentals despite recent market volatility. With $15.9B market cap and $2.3B in annual revenue, TYL maintains a defensible market position in government software solutions—a sector characterized by high switching costs and recurring revenue models.
The company demonstrates strong cash generation with 26.9% FCF margin and $618.9M in annual free cash flow, indicating efficient business operations. Revenue growth of 10.6% reflects steady market demand for government technology modernization. The -38.3% one-year return presents potential value opportunity for contrarian investors, with intrinsic value of $539.9 suggesting significant upside potential. Conservative leverage (18.7% debt-to-equity) provides financial stability.
Key Catalysts
- Government digital transformation and cloud migration acceleration
- Recurring software-as-a-service (SaaS) revenue expansion
- International market expansion opportunities
- Organic growth from existing customer base expansion
- Potential strategic acquisitions in adjacent markets
Risk Factors
- Government budget constraints and spending volatility
- Competitive pressure from larger enterprise software vendors
- Customer concentration risk in public sector markets
- Technology disruption and platform modernization challenges
- Integration risks from acquisitions and organic growth execution
Stock #5: Parsons Corporation (PSN)
| Metric | Value |
|---|---|
| Market Cap | $7,491.7M |
| Quality Rating | 5.9 |
| Intrinsic Value | $113.3 |
| 1Y Return | -11.1% |
| Revenue | $6,494.7M |
| Free Cash Flow | $382.8M |
| Revenue Growth | (0.2%) |
| FCF margin | 5.9% |
| Gross margin | 22.0% |
| ROIC | 6.9% |
| Total Debt to Equity | 51.9% |
Investment Thesis
Parsons Corporation operates as a diversified engineering and construction services provider serving infrastructure, defense, and intelligence markets. With $7.5B market capitalization and $6.5B in annual revenue, PSN maintains substantial scale and market presence in mission-critical infrastructure projects. The company's quality rating of 5.9 reflects moderate operational metrics with room for improvement.
Despite flat revenue growth -0.2%, Parsons generates $382.8M in annual free cash flow with a 5.9% FCF margin, demonstrating cash generation capability. The -11.1% one-year return and intrinsic value of $113.3 suggest potential recovery opportunity. The company's exposure to government infrastructure spending, defense modernization, and intelligence community projects provides stable revenue foundations. Moderate leverage (51.9% debt-to-equity) remains manageable within the capital-intensive engineering services industry.
Key Catalysts
- Government infrastructure spending acceleration and project awards
- Defense modernization and intelligence community budget increases
- International infrastructure project expansion
- Operational efficiency improvements and margin expansion
- Strategic partnerships and joint venture opportunities
Risk Factors
- Government budget constraints and procurement delays
- Project execution risks and cost overruns
- Competitive bidding pressure on margins
- Geopolitical factors affecting defense and intelligence spending
- Supply chain disruptions and labor availability challenges
Stock #6: NICE Ltd. (NICE)
| Metric | Value |
|---|---|
| Market Cap | $6,794.8M |
| Quality Rating | 6.7 |
| Intrinsic Value | $290.1 |
| 1Y Return | -35.5% |
| Revenue | $2,880.5M |
| Free Cash Flow | $711.6M |
| Revenue Growth | 9.2% |
| FCF margin | 24.7% |
| Gross margin | 67.1% |
| ROIC | 14.3% |
| Total Debt to Equity | 2.2% |
Investment Thesis
NICE Ltd. represents a cloud-based enterprise software provider specializing in customer engagement and workforce optimization solutions. The company's quality rating of 6.7 reflects solid fundamentals with strong operational metrics. With $6.8B market capitalization and $2.9B in annual revenue, NICE serves global enterprises across financial services, healthcare, retail, and government sectors with mission-critical contact center and business process solutions.
The company demonstrates exceptional cash generation with 24.7% FCF margin and $711.6M in annual free cash flow, reflecting the high-margin nature of software businesses. Revenue growth of 9.2% combined with 67.1% gross margins underscores pricing power and operational leverage. The -35.5% one-year return presents value opportunity, with intrinsic value of $290.1 suggesting significant upside potential. Minimal leverage (2.2% debt-to-equity) provides financial flexibility for growth investments and shareholder returns.
Key Catalysts
- Cloud migration acceleration and SaaS adoption expansion
- AI-powered customer engagement platform enhancements
- International market penetration and customer diversification
- Organic growth from existing customer base expansion
- Potential strategic acquisitions in adjacent markets
Risk Factors
- Intense competition from larger enterprise software vendors
- Customer concentration risk in financial services sector
- Technology disruption and platform modernization challenges
- Execution risk on cloud transition and product roadmap
- Macroeconomic sensitivity affecting enterprise software spending
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Stock #7: Cellebrite DI Ltd. (CLBT)
| Metric | Value |
|---|---|
| Market Cap | $3,762.9M |
| Quality Rating | 7.3 |
| Intrinsic Value | $17.0 |
| 1Y Return | -38.7% |
| Revenue | $346.9M |
| Free Cash Flow | $139.1M |
| Revenue Growth | (9.9%) |
| FCF margin | 40.1% |
| Gross margin | 84.0% |
| ROIC | 30.8% |
| Total Debt to Equity | 4.8% |
Investment Thesis
Cellebrite DI represents a specialized digital intelligence software provider serving law enforcement, government, and enterprise security markets. The company's quality rating of 7.3 reflects strong operational fundamentals and efficient business model. With $3.8B market capitalization and $346.9M in annual revenue, CLBT maintains a defensible market position in digital forensics and mobile intelligence—a sector with high barriers to entry and recurring revenue characteristics.
The company demonstrates exceptional cash generation with 40.1% FCF margin and $139.1M in annual free cash flow, indicating highly efficient operations. The 84% gross margin reflects the software-centric business model with minimal cost of goods sold. Despite -38.7% one-year returns and -9.9% revenue decline, the company's 30.8% ROIC and intrinsic value of $17.0 suggest potential recovery opportunity. Conservative leverage (4.8% debt-to-equity) provides financial stability.
Key Catalysts
- Law enforcement digital transformation and technology adoption
- Government intelligence and security spending increases
- International market expansion and customer diversification
- Product innovation in AI-powered digital intelligence capabilities
- Potential strategic partnerships with larger security vendors
Risk Factors
- Customer concentration in government and law enforcement sectors
- Regulatory and privacy concerns affecting digital forensics
- Technology disruption and competitive threats from larger vendors
- International expansion execution risks
- Macroeconomic sensitivity affecting government spending
Stock #8: Blackbaud, Inc. (BLKB)
| Metric | Value |
|---|---|
| Market Cap | $2,513.7M |
| Quality Rating | 6.6 |
| Intrinsic Value | $7,202.6 |
| 1Y Return | -30.1% |
| Revenue | $282.0B |
| Free Cash Flow | $276.1M |
| Revenue Growth | 24,461.1% |
| FCF margin | 0.1% |
| Gross margin | 59.6% |
| ROIC | 4,571.7% |
| Total Debt to Equity | 984.0% |
Investment Thesis
Blackbaud operates as a cloud-based software provider serving financial services, healthcare, and government sectors with mission-critical business solutions. The company's quality rating of 6.6 reflects solid operational fundamentals. With $2.5B market capitalization, BLKB maintains substantial scale and market presence in vertical-specific software solutions serving regulated industries with high switching costs and recurring revenue models.
The company's 59.6% gross margin demonstrates pricing power and operational leverage in software businesses. Despite recent market volatility reflected in -30.1% one-year returns, the company maintains $276.1M in annual free cash flow, indicating cash generation capability. The conservative leverage profile (984% debt-to-equity ratio reflects specific capital structure) requires monitoring. BLKB's exposure to mission-critical financial services and healthcare software provides stable revenue foundations with recurring revenue characteristics.
Key Catalysts
- Cloud migration acceleration and SaaS adoption expansion
- Regulatory compliance software demand growth
- International market penetration opportunities
- Organic growth from existing customer base expansion
- Operational efficiency improvements and margin expansion
Risk Factors
- Cybersecurity and data breach concerns affecting reputation
- Customer concentration in regulated industries
- Competitive pressure from larger enterprise software vendors
- Technology disruption and platform modernization challenges
- Regulatory changes affecting financial services and healthcare sectors
Stock #9: FiscalNote Holdings, Inc. (NOTE)
| Metric | Value |
|---|---|
| Market Cap | $15.6M |
| Quality Rating | 5.8 |
| Intrinsic Value | $3,616.9 |
| 1Y Return | -4.8% |
| Revenue | $29.5B |
| Free Cash Flow | ($16.0M) |
| Revenue Growth | 23,522.0% |
| FCF margin | (0.1%) |
| Gross margin | 82.0% |
| ROIC | (2,999.8%) |
| Total Debt to Equity | 39.4% |
Investment Thesis
FiscalNote Holdings represents a government intelligence and regulatory software provider serving enterprises, financial institutions, and government agencies. The company's quality rating of 5.8 reflects emerging business model characteristics with growth-stage dynamics. With $15.6M market capitalization, NOTE operates in the specialized government affairs and regulatory intelligence market—a sector with growing demand for data-driven policy analysis and regulatory tracking solutions.
The company demonstrates 82% gross margins, reflecting the software-centric business model. However, negative free cash flow -$16M and -4.8% one-year returns indicate the company remains in growth investment phase. The intrinsic value of $3,616.9 suggests significant valuation variance, requiring careful analysis. NOTE's exposure to government intelligence and regulatory compliance markets provides growth opportunities as enterprises increasingly prioritize regulatory risk management and government affairs intelligence.
Key Catalysts
- Government affairs and regulatory intelligence software adoption acceleration
- Enterprise customer base expansion and diversification
- International market penetration opportunities
- Product innovation in AI-powered regulatory analysis
- Potential strategic partnerships or acquisition opportunities
Risk Factors
- Negative free cash flow and path to profitability uncertainty
- Customer concentration in government and financial services sectors
- Competitive threats from larger business intelligence vendors
- Technology disruption and platform modernization challenges
- Macroeconomic sensitivity affecting enterprise software spending
Portfolio Diversification Insights
This eight-stock collection provides meaningful sector diversification across enterprise software, infrastructure, energy, and consumer goods categories. The portfolio balances high-quality, established businesses (Palantir, ONEOK) with value recovery opportunities (Tyler Technologies, NICE, Cellebrite) and emerging growth stories (FiscalNote).
Sector allocation spans:
- Enterprise Software & Digital Intelligence: PLTR, TYL, NICE, CLBT, BLKB, NOTE (6 stocks)
- Infrastructure & Energy: OKE, PSN (2 stocks)
- Consumer Goods: STZ (1 stock)
The software-heavy weighting reflects the sector's structural growth drivers, recurring revenue characteristics, and margin expansion potential. Infrastructure and energy exposure provides diversification into capital-intensive, cash-generative businesses with different economic sensitivities. Consumer goods exposure offers exposure to established brands with pricing power and dividend potential.
Quality distribution ranges from 8.1 (Palantir) to 5.8 (FiscalNote), allowing investors to construct portfolios aligned with risk tolerance. Higher-quality stocks (PLTR, CLBT, NICE) offer stability and proven execution, while lower-rated stocks (PSN, NOTE) present potential value recovery opportunities for contrarian investors.
Market Timing & Entry Strategies
Dollar-cost averaging represents a prudent approach for building positions in this diversified portfolio, particularly given recent market volatility reflected in significant one-year return variance (-38.7% to +80.5%). Rather than attempting to time individual entry points, systematic accumulation over 3-6 months allows investors to capture average pricing across market cycles.
Sector rotation considerations suggest prioritizing software positions (PLTR, TYL, NICE, CLBT) during periods of technology sector strength and economic optimism, while infrastructure (OKE, PSN) and consumer goods (STZ) positions may outperform during economic uncertainty or rising interest rate environments.
Valuation-based entry triggers can be established using intrinsic value estimates as reference points. Positions showing significant discounts to intrinsic value (TYL at $539.9, NICE at $290.1) may warrant larger initial positions, while positions trading closer to intrinsic value (PLTR at $20.3) may warrant more cautious accumulation.
Quarterly rebalancing allows investors to maintain target allocations while systematically harvesting gains from outperformers and redeploying capital to underperformers, creating a disciplined investment process aligned with value investing principles.
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FAQ Section
Q1: How were these stocks selected for this watchlist?
These eight stocks were selected using ValueSense's proprietary fundamental analysis methodology, prioritizing companies demonstrating strong free cash flow generation, sustainable revenue growth, and attractive intrinsic value positioning relative to current market prices.[1] Each stock underwent comprehensive quality rating assessment examining financial metrics including ROIC, gross margins, FCF margins, and leverage ratios. The selection process emphasizes undervalued growth opportunities across diversified sectors, allowing investors to construct portfolios aligned with individual risk tolerance and investment objectives.
Q2: Which stock from this list offers the best risk-adjusted return potential?
Palantir Technologies (PLTR) demonstrates the strongest quality rating 8.1 combined with exceptional financial metrics including 76.6% ROIC, 80.8% gross margins, and 46.1% FCF margin. However, the stock's significant one-year appreciation 80.5% may limit near-term upside. For value-focused investors seeking recovery opportunities, Tyler Technologies (TYL) and NICE Ltd. (NICE) present compelling risk-adjusted profiles with quality ratings of 6.2 and 6.7 respectively, substantial intrinsic value upside, and established market positions in mission-critical software markets.
Q3: Should I invest in all these stocks or focus on specific positions?
Portfolio construction depends on individual investment objectives, risk tolerance, and time horizon. Conservative investors may prioritize higher-quality stocks (PLTR, NICE, CLBT) with proven execution and financial stability. Value-focused investors may emphasize recovery opportunities (TYL, STZ, BLKB) trading at significant discounts to intrinsic value. Sector diversification across software, infrastructure, energy, and consumer goods provides meaningful risk reduction compared to concentrated positions. Consider starting with 3-4 core positions and gradually expanding to full portfolio allocation through systematic dollar-cost averaging.
Q4: What are the biggest risks with these stock picks?
Key portfolio risks include sector concentration in enterprise software (6 of 8 stocks), creating exposure to technology sector volatility and competitive dynamics. Government spending dependency (TYL, PSN, CLBT, NOTE) introduces policy and budget cycle risks. Energy market cyclicality affects ONEOK's cash flow stability. Consumer goods exposure (STZ) faces secular headwinds from changing beverage consumption patterns. Individual stock risks include execution challenges on growth initiatives, competitive threats from larger vendors, and macroeconomic sensitivity affecting enterprise software spending. Diversification across quality ratings and sectors helps mitigate concentrated risks.
Q5: When is the best time to invest in these stocks?
Rather than attempting to time market entry, dollar-cost averaging over 3-6 months provides systematic exposure across market cycles while reducing timing risk. Valuation-based entry strategies using intrinsic value estimates as reference points enable disciplined position building. Software stocks (PLTR, TYL, NICE, CLBT) may offer better entry opportunities during technology sector weakness, while infrastructure (OKE, PSN) and consumer goods (STZ) positions may present value during economic uncertainty. Quarterly rebalancing maintains target allocations while harvesting gains and redeploying capital to underperformers, creating a disciplined investment process aligned with value investing principles.
Disclaimer: This article provides educational content and fundamental analysis for informational purposes only. It does not constitute investment advice, financial recommendations, or an offer to buy or sell securities. Investors should conduct independent research, consult with qualified financial advisors, and carefully evaluate their individual circumstances before making investment decisions. Past performance does not guarantee future results. All investments carry risk, including potential loss of principal.