10 Best Retailtech for February 2026
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Market Overview & Selection Criteria
The current market environment presents compelling opportunities for value-focused investors seeking exposure to high-growth companies trading at reasonable valuations. Our selection methodology emphasizes fundamental strength, revenue growth momentum, and intrinsic value discrepancies. These ten stocks represent a diversified portfolio spanning fintech, software-as-a-service (SaaS), insurance, hospitality technology, and auction services sectors.
Each company was evaluated using ValueSense's proprietary analysis framework, which combines automated fundamental analysis, intrinsic value calculations, and machine learning-driven insights. We prioritized companies demonstrating strong free cash flow generation, healthy return on invested capital (ROIC), and revenue growth trajectories that support long-term wealth creation. The selection balances established market leaders with emerging growth companies, offering investors multiple pathways to portfolio diversification.
Featured Stock Analysis
Amazon.com, Inc. (AMZN)
| Metric | Value |
|---|---|
| Market Cap | $2,571.2B |
| Quality Rating | 6.1 |
| Intrinsic Value | $164.8 |
| 1Y Return | 2.0% |
| Revenue | $691.3B |
| Free Cash Flow | $10.6B |
| Revenue Growth | 11.5% |
| FCF margin | 1.5% |
| Gross margin | 50.5% |
| ROIC | 15.4% |
| Total Debt to Equity | 36.6% |
Investment Thesis
Amazon represents a foundational holding for growth-oriented portfolios seeking exposure to cloud computing, e-commerce, and digital advertising. With a market capitalization of $2.57 trillion and annual revenue of $691.3 billion, AMZN demonstrates the scale and operational leverage characteristic of mega-cap technology leaders. The company's quality rating of 6.1 reflects solid fundamentals, though the intrinsic value of $164.8 suggests current market pricing may offer limited upside from valuation expansion alone.
The company's 11.5% revenue growth and 15.4% return on invested capital indicate sustained competitive advantages in cloud infrastructure and retail logistics. Free cash flow of $10.6 billion provides substantial capital for reinvestment, shareholder returns, and strategic acquisitions. Amazon's gross margin of 50.5% demonstrates pricing power across its diversified business segments, while the debt-to-equity ratio of 36.6% remains manageable for a company of this scale.
Key Catalysts
- Continued AWS cloud services expansion and market share gains
- Advertising business acceleration and margin improvement
- Artificial intelligence integration across retail and cloud platforms
- International market penetration and logistics network optimization
- Potential margin expansion from operational efficiency initiatives
Risk Factors
- Regulatory scrutiny regarding market dominance and antitrust concerns
- Intense competition in cloud computing from Microsoft and Google
- E-commerce margin pressure from fulfillment costs and competition
- Macroeconomic sensitivity affecting consumer spending patterns
- Execution risks on major technology initiatives
Shopify Inc. (SHOP)
| Metric | Value |
|---|---|
| Market Cap | $175.4B |
| Quality Rating | 7.3 |
| Intrinsic Value | $26.9 |
| 1Y Return | 10.1% |
| Revenue | $10.7B |
| Free Cash Flow | $1,910.9M |
| Revenue Growth | 30.3% |
| FCF margin | 17.9% |
| Gross margin | 48.7% |
| ROIC | 57.9% |
| Total Debt to Equity | 8.9% |
Investment Thesis
Shopify stands out as a high-quality growth engine within the e-commerce infrastructure space, commanding a quality rating of 7.3—among the highest in this portfolio. The company's market cap of $175.4 billion reflects investor confidence in its platform-as-a-service model, which enables merchants to build and scale online businesses. With revenue of $10.7 billion growing at an impressive 30.3% annually, SHOP demonstrates the growth trajectory typically associated with SaaS leaders.
The standout metric is Shopify's return on invested capital of 57.9%, indicating exceptional capital efficiency and competitive moat strength. Free cash flow margin of 17.9% on $1.91 billion in absolute FCF showcases the platform's profitability and cash generation capability. The intrinsic value of $26.9 suggests potential undervaluation, while the 10.1% one-year return reflects steady appreciation. Shopify's gross margin of 48.7% and minimal debt (8.9% debt-to-equity) position the company for sustained growth investment.
Key Catalysts
- Expansion of merchant base across emerging markets and verticals
- Subscription revenue growth from premium tier adoption
- Fulfillment network development and logistics integration
- Artificial intelligence tools for merchant optimization and personalization
- Strategic partnerships and ecosystem expansion
Risk Factors
- Dependence on merchant spending and e-commerce growth rates
- Competition from Amazon, WooCommerce, and emerging platforms
- Regulatory changes affecting payment processing and data privacy
- Customer concentration risk among larger merchants
- Technology execution risks on new platform features
Nu Holdings Ltd. (NU)
| Metric | Value |
|---|---|
| Market Cap | $87.4B |
| Quality Rating | 6.8 |
| Intrinsic Value | $80.4 |
| 1Y Return | 32.1% |
| Revenue | $13.5B |
| Free Cash Flow | $3,665.8M |
| Revenue Growth | 28.5% |
| FCF margin | 27.1% |
| Gross margin | 43.0% |
| ROIC | 35.8% |
| Total Debt to Equity | 23.1% |
Investment Thesis
Nu Holdings represents a compelling fintech opportunity with exceptional growth metrics and strong fundamentals. The Brazilian-headquartered digital bank boasts a market cap of $87.4 billion and a quality rating of 6.8, reflecting solid operational execution. With revenue of $13.5 billion growing at 28.5% annually and free cash flow of $3.67 billion, NU demonstrates the scalability of digital banking models in emerging markets.
The company's 35.8% return on invested capital and 27.1% free cash flow margin indicate highly efficient capital deployment and strong unit economics. The intrinsic value of $80.4 suggests potential undervaluation relative to growth prospects, while the impressive 32.1% one-year return reflects market recognition of the company's momentum. NU's gross margin of 43% and conservative debt-to-equity ratio of 23.1% provide financial flexibility for expansion across Latin America and beyond.
Key Catalysts
- Geographic expansion into new Latin American markets
- Product diversification including lending, investments, and insurance
- Digital wallet and payment ecosystem development
- Cross-selling opportunities to existing customer base
- Potential profitability inflection as scale increases
Risk Factors
- Regulatory uncertainty in Latin American banking markets
- Currency fluctuation exposure and macroeconomic volatility
- Competition from traditional banks and other fintech players
- Credit quality deterioration during economic downturns
- Geopolitical risks affecting emerging market operations
Toast, Inc. (TOST)
| Metric | Value |
|---|---|
| Market Cap | $18.1B |
| Quality Rating | 6.9 |
| Intrinsic Value | $75.3 |
| 1Y Return | -22.8% |
| Revenue | $5,858.0M |
| Free Cash Flow | $564.0M |
| Revenue Growth | 25.8% |
| FCF margin | 9.6% |
| Gross margin | 25.7% |
| ROIC | 55.3% |
| Total Debt to Equity | 1.8% |
Investment Thesis
Toast operates as a cloud-based point-of-sale and restaurant management platform, serving the hospitality technology sector with a market cap of $18.1 billion and quality rating of 6.9. The company's revenue of $5.86 billion growing at 25.8% annually demonstrates strong demand for digital transformation solutions in the restaurant industry. With free cash flow of $564 million and an impressive 55.3% return on invested capital, TOST showcases exceptional operational leverage.
The intrinsic value of $75.3 suggests potential undervaluation, though the negative 22.8% one-year return reflects recent market volatility and sector headwinds. Toast's 9.6% free cash flow margin and minimal debt (1.8% debt-to-equity) provide financial stability for continued investment in product development and market expansion. The 25.7% gross margin reflects the software-centric nature of the business model, though lower than pure SaaS peers due to hardware and services components.
Key Catalysts
- Recovery in restaurant traffic and consumer spending post-economic uncertainty
- International expansion into European and Asian markets
- Artificial intelligence-powered analytics and operational tools
- Payment processing integration and margin expansion
- Consolidation of fragmented restaurant technology market
Risk Factors
- Cyclical exposure to restaurant industry performance and consumer discretionary spending
- Customer concentration among independent and mid-market restaurants
- Competition from Square, Toast, and integrated POS providers
- Technology adoption challenges among smaller restaurant operators
- Potential margin compression from competitive pricing pressures
The Hanover Insurance Group, Inc. (THG)
| Metric | Value |
|---|---|
| Market Cap | $6,159.4M |
| Quality Rating | 6.3 |
| Intrinsic Value | $418.4 |
| 1Y Return | 14.2% |
| Revenue | $6,483.1M |
| Free Cash Flow | $1,003.9M |
| Revenue Growth | 5.1% |
| FCF margin | 15.5% |
| Gross margin | 23.3% |
| ROIC | 20.6% |
| Total Debt to Equity | 37.4% |
Investment Thesis
The Hanover Insurance Group provides diversified property and casualty insurance with a market cap of $6.16 billion and quality rating of 6.3. The company's revenue of $6.48 billion growing at a modest 5.1% reflects the mature insurance market, though the 15.5% free cash flow margin demonstrates strong cash generation capabilities. With free cash flow of $1.004 billion and a 20.6% return on invested capital, THG exhibits the profitability characteristics of well-managed insurance operators.
The intrinsic value of $418.4 suggests significant undervaluation relative to current market pricing, while the 14.2% one-year return reflects investor recognition of value. THG's 23.3% gross margin and conservative debt-to-equity ratio of 37.4% provide financial flexibility for dividend distributions and share buybacks. The company's diversified portfolio across commercial, personal, and specialty insurance lines reduces concentration risk.
Key Catalysts
- Premium rate increases reflecting inflationary cost pressures
- Improved underwriting discipline and loss ratio management
- Digital transformation and operational efficiency gains
- Expansion in specialty insurance segments with higher margins
- Capital return programs including dividends and share repurchases
Risk Factors
- Exposure to catastrophic weather events and natural disasters
- Rising claims costs from inflation and litigation trends
- Competitive pricing pressures in personal lines insurance
- Interest rate sensitivity affecting investment portfolio returns
- Regulatory changes affecting insurance pricing and underwriting
Wix.com Ltd. (WIX)
| Metric | Value |
|---|---|
| Market Cap | $4,806.0M |
| Quality Rating | 7.3 |
| Intrinsic Value | $335.3 |
| 1Y Return | -64.1% |
| Revenue | $1,929.2M |
| Free Cash Flow | $568.9M |
| Revenue Growth | 13.2% |
| FCF margin | 29.5% |
| Gross margin | 68.4% |
| ROIC | 21.0% |
| Total Debt to Equity | (563.6%) |
Investment Thesis
Wix operates a website building and e-commerce platform with a market cap of $4.81 billion and the highest quality rating in the portfolio at 7.3. The company's revenue of $1.93 billion growing at 13.2% annually reflects steady demand for website creation tools among small businesses and entrepreneurs. The standout metric is Wix's 68.4% gross margin, indicating strong pricing power and minimal cost of goods sold—characteristic of pure software businesses.
With free cash flow of $569 million and a 29.5% free cash flow margin, Wix demonstrates exceptional cash generation relative to revenue size. The 21% return on invested capital reflects efficient capital deployment, while the intrinsic value of $335.3 suggests substantial undervaluation. The negative 64.1% one-year return represents a significant drawdown, though the company's strong fundamentals and negative debt position (563.6% debt-to-equity reflects net cash) provide downside protection.
Key Catalysts
- Artificial intelligence-powered website design and content generation
- E-commerce feature expansion and merchant services integration
- International market penetration and localization
- Premium subscription tier adoption and upselling
- Strategic partnerships with payment processors and logistics providers
Risk Factors
- Intense competition from Squarespace, Shopify, and WordPress
- Customer churn risk if product innovation slows
- Dependence on small business spending and entrepreneurship trends
- Pricing pressure from freemium model and competitive offerings
- Technology execution risks on AI and automation features
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KAR Auction Services, Inc. (KAR)
| Metric | Value |
|---|---|
| Market Cap | $3,191.4M |
| Quality Rating | 5.9 |
| Intrinsic Value | $12.9 |
| 1Y Return | 43.5% |
| Revenue | $1,895.2M |
| Free Cash Flow | $186.8M |
| Revenue Growth | 12.3% |
| FCF margin | 9.9% |
| Gross margin | 45.3% |
| ROIC | 11.6% |
| Total Debt to Equity | (2.1%) |
Investment Thesis
KAR Auction Services operates as a digital marketplace for vehicle auctions, serving dealers, fleet operators, and financial institutions with a market cap of $3.19 billion and quality rating of 5.9. The company's revenue of $1.90 billion growing at 12.3% annually reflects steady demand for auction services in the automotive sector. With free cash flow of $187 million and a 9.9% free cash flow margin, KAR generates consistent cash returns despite modest profitability metrics.
The intrinsic value of $12.9 suggests potential undervaluation, while the impressive 43.5% one-year return reflects market recognition of improving fundamentals. KAR's 45.3% gross margin demonstrates the economics of marketplace models, while the minimal debt position (negative 2.1% debt-to-equity reflects net cash) provides financial flexibility. The 11.6% return on invested capital indicates moderate capital efficiency typical of transaction-based businesses.
Key Catalysts
- Recovery in used vehicle prices and auction volumes
- Digital transformation and mobile platform adoption
- International expansion of auction services
- Data analytics and pricing intelligence monetization
- Consolidation opportunities in fragmented auction market
Risk Factors
- Cyclical exposure to used vehicle market and economic conditions
- Dependence on dealer and fleet operator spending
- Competition from private sales platforms and direct-to-consumer channels
- Inventory supply constraints affecting auction volumes
- Technology disruption from autonomous vehicles and changing ownership models
Diebold Nixdorf, Incorporated (DBD)
| Metric | Value |
|---|---|
| Market Cap | $2,547.3M |
| Quality Rating | 5.6 |
| Intrinsic Value | $208.7 |
| 1Y Return | 58.8% |
| Revenue | $2,933.1M |
| Free Cash Flow | $246.8M |
| Revenue Growth | (22.8%) |
| FCF margin | 8.4% |
| Gross margin | 31.4% |
| ROIC | 5.1% |
| Total Debt to Equity | 84.0% |
Investment Thesis
Diebold Nixdorf provides ATM and banking technology solutions with a market cap of $2.55 billion and quality rating of 5.6. The company's revenue of $2.93 billion reflects exposure to banking infrastructure modernization, though the negative 22.8% revenue growth indicates sector headwinds and transition challenges. With free cash flow of $247 million and an 8.4% free cash flow margin, DBD maintains cash generation despite operational challenges.
The intrinsic value of $208.7 suggests significant undervaluation, while the exceptional 58.8% one-year return reflects a potential turnaround narrative. The 31.4% gross margin indicates reasonable pricing power, though the elevated debt-to-equity ratio of 84% reflects capital structure challenges. The 5.1% return on invested capital suggests below-average capital efficiency, indicating the company is in transition.
Key Catalysts
- Digital banking transformation and modernization cycles
- Software and services revenue growth offsetting hardware decline
- Cost restructuring and operational efficiency improvements
- Emerging market expansion for ATM and banking solutions
- Potential strategic partnerships or consolidation
Risk Factors
- Secular decline in cash usage and ATM demand
- Transition execution risks and integration challenges
- High debt burden limiting financial flexibility
- Competitive pressure from fintech and digital banking solutions
- Technology obsolescence in banking infrastructure
Agilysys, Inc. (AGYS)
| Metric | Value |
|---|---|
| Market Cap | $2,372.4M |
| Quality Rating | 6.6 |
| Intrinsic Value | $52.2 |
| 1Y Return | -5.5% |
| Revenue | $310.6M |
| Free Cash Flow | $59.2M |
| Revenue Growth | 17.9% |
| FCF margin | 19.1% |
| Gross margin | 60.9% |
| ROIC | 8.6% |
| Total Debt to Equity | 11.2% |
Investment Thesis
Agilysys develops hospitality software solutions for hotels, casinos, and restaurants with a market cap of $2.37 billion and quality rating of 6.6. The company's revenue of $311 million growing at 17.9% annually demonstrates strong demand for cloud-based hospitality management systems. With free cash flow of $59 million and a 19.1% free cash flow margin, AGYS exhibits strong cash generation relative to its size.
The intrinsic value of $52.2 suggests potential undervaluation, though the negative 5.5% one-year return reflects recent market volatility. AGYS's 60.9% gross margin—among the highest in the portfolio—reflects the software-centric business model and pricing power. The conservative debt-to-equity ratio of 11.2% and 8.6% return on invested capital indicate a financially stable company with room for growth investment.
Key Catalysts
- Cloud migration acceleration in hospitality industry
- Artificial intelligence-powered guest experience and operations tools
- International expansion into European and Asian markets
- Consolidation of fragmented hospitality software market
- Recurring subscription revenue growth and margin expansion
Risk Factors
- Cyclical exposure to hospitality industry performance
- Customer concentration among larger hotel and casino operators
- Competition from larger enterprise software providers
- Technology adoption challenges among independent properties
- Integration risks from acquisitions and product consolidation
Nayax Ltd. (NYAX)
| Metric | Value |
|---|---|
| Market Cap | $2,182.1M |
| Quality Rating | 7.1 |
| Intrinsic Value | $30.3 |
| 1Y Return | 44.6% |
| Revenue | $371.5M |
| Free Cash Flow | $24.6M |
| Revenue Growth | 26.6% |
| FCF margin | 6.6% |
| Gross margin | 47.2% |
| ROIC | 19.6% |
| Total Debt to Equity | 80.2% |
Investment Thesis
Nayax operates a digital payment and vending technology platform with a market cap of $2.18 billion and quality rating of 7.1. The company's revenue of $372 million growing at 26.6% annually reflects strong demand for cashless payment solutions in unattended retail and vending environments. With free cash flow of $25 million and a 6.6% free cash flow margin, NYAX is in growth investment mode while maintaining positive cash generation.
The intrinsic value of $30.3 suggests potential undervaluation, while the strong 44.6% one-year return reflects market recognition of growth momentum. NYAX's 47.2% gross margin demonstrates reasonable pricing power in the payment processing space, though the elevated debt-to-equity ratio of 80.2% reflects leverage used for growth investment. The 19.6% return on invested capital indicates efficient capital deployment despite the growth-focused capital structure.
Key Catalysts
- Expansion of cashless payment adoption in vending and unattended retail
- Geographic expansion into new markets and verticals
- Software and services revenue growth from installed base
- Strategic partnerships with vending machine manufacturers
- Potential acquisition by larger payment processing platforms
Risk Factors
- Dependence on vending machine and unattended retail growth
- Competition from larger payment processors and fintech platforms
- Technology disruption from mobile payments and digital wallets
- Customer concentration among major vending operators
- High debt burden limiting financial flexibility
Portfolio Diversification Insights
This ten-stock portfolio provides meaningful diversification across multiple dimensions. Sector-wise, the collection spans fintech (NU, NYAX), software-as-a-service (SHOP, WIX, AGYS, TOST), e-commerce infrastructure (AMZN, SHOP), insurance (THG), and transaction services (KAR, DBD). This diversification reduces concentration risk while providing exposure to secular growth trends including digital transformation, cloud adoption, and fintech disruption.
By market capitalization, the portfolio ranges from mega-cap (AMZN at $2.57T) to small-cap (NYAX at $2.18B), offering investors exposure to both established market leaders and emerging growth companies. The quality ratings cluster around 6.5-7.3, indicating fundamentally sound businesses with sustainable competitive advantages. Revenue growth rates span from 5.1% (THG) to 30.3% (SHOP), allowing investors to balance stability with growth exposure.
Free cash flow generation is particularly strong across the portfolio, with absolute FCF ranging from $25 million (NYAX) to $10.6 billion (AMZN). The free cash flow margins demonstrate the quality of earnings, with software-centric businesses (SHOP, WIX, AGYS) generating 17-30% margins, while transaction-based and capital-intensive businesses (KAR, DBD) generate 8-10% margins. This diversity in cash generation models provides resilience across economic cycles.
Market Timing & Entry Strategies
Dollar-cost averaging represents a prudent approach for building positions in this portfolio, particularly given the recent volatility reflected in one-year returns ranging from -64.1% (WIX) to +58.8% (DBD). Rather than attempting to time market bottoms, investors can establish positions over 3-6 months, reducing timing risk while allowing for portfolio rebalancing based on fundamental developments.
Sector rotation opportunities suggest prioritizing fintech and software positions (NU, SHOP, AGYS) during periods of economic optimism and lower interest rates, while rotating toward value and insurance positions (THG, KAR) during periods of economic uncertainty. The portfolio's diversification enables tactical rebalancing without abandoning the long-term thesis.
Valuation-based entry points can be established using the intrinsic value metrics provided. Positions trading at 20%+ discounts to intrinsic value (TOST, THG, WIX, NYAX) may warrant larger initial positions, while positions trading closer to intrinsic value (AMZN, SHOP) can be built more gradually. This approach aligns position sizing with valuation opportunity.
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FAQ Section
Q1: How were these stocks selected for this portfolio?
These ten stocks were selected using ValueSense's proprietary fundamental analysis framework, which combines automated data analysis, intrinsic value calculations, and machine learning-driven insights. Each company demonstrates strong free cash flow generation, reasonable valuations relative to growth prospects, and sustainable competitive advantages. The selection prioritizes companies with quality ratings above 5.6 and revenue growth exceeding 5% annually, ensuring a baseline of financial health and momentum.
Q2: Which stock offers the best risk-adjusted return potential?
Shopify (SHOP) stands out with the highest quality rating 7.3, exceptional return on invested capital 57.9%, and strong free cash flow generation (17.9% margin). The combination of 30.3% revenue growth with minimal debt (8.9% debt-to-equity) and a reasonable intrinsic value discount suggests favorable risk-adjusted return potential. However, individual risk tolerance and portfolio objectives should guide position sizing decisions.
Q3: Should I buy all these stocks or focus on a subset?
Portfolio construction depends on your investment objectives, risk tolerance, and time horizon. A diversified approach incorporating 5-7 positions from this list provides meaningful sector and company-size diversification while remaining manageable. Conservative investors might prioritize AMZN, SHOP, and THG for stability, while growth-oriented investors might emphasize NU, TOST, and AGYS. ValueSense's backtesting tools can help evaluate historical performance of different portfolio combinations.
Q4: What are the biggest risks with these picks?
The portfolio faces multiple risk categories: cyclical exposure (TOST, KAR, DBD), emerging market risks (NU), competitive intensity (SHOP, WIX, AGYS), and leverage concerns (NYAX, DBD). Additionally, technology execution risks affect software companies, while regulatory uncertainty impacts fintech and insurance positions. Macroeconomic sensitivity affects consumer discretionary spending, impacting hospitality and e-commerce exposure. Diversification across these risk factors provides some mitigation, but investors should monitor developments closely.
Q5: When is the best time to invest in these stocks?
ValueSense's intrinsic value metrics provide objective entry point guidance. Stocks trading at 20%+ discounts to intrinsic value (TOST at $75.3, THG at $418.4, WIX at $335.3) may warrant immediate consideration, while positions closer to fair value can be accumulated gradually. Dollar-cost averaging over 3-6 months reduces timing risk, while monitoring quarterly earnings reports and macroeconomic indicators helps identify optimal entry windows. ValueSense's earnings calendar and sentiment analysis tools provide real-time catalysts for tactical positioning.