10 Best Service Providers for February 2026
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Market Overview & Selection Criteria
The service providers sector continues to show resilience amid economic shifts, with companies in IT services, environmental management, research analytics, and specialized solutions demonstrating strong intrinsic value potential despite varied 1Y returns. ValueSense analysis highlights these top 10 undervalued stock picks selected based on high intrinsic value relative to market perception, solid Quality ratings (ranging 5.7-7.4), robust ROIC, healthy FCF margins, and growth metrics like revenue expansion. Methodology prioritizes firms with Free Cash Flow generation, manageable Total Debt to Equity, and margins indicating operational efficiency. These picks target best value stocks in service-oriented businesses, ideal for diversified stock watchlists focusing on long-term investment opportunities.
Featured Stock Analysis
Stock #1: CGI Inc. (GIB)
| Metric | Value |
|---|---|
| Market Cap | $18.5B |
| Quality Rating | 7.0 |
| Intrinsic Value | $149.3 |
| 1Y Return | -27.8% |
| Revenue | CA$16.2B |
| Free Cash Flow | CA$2,258.9M |
| Revenue Growth | 8.9% |
| FCF margin | 14.0% |
| Gross margin | 20.5% |
| ROIC | 17.9% |
| Total Debt to Equity | 48.4% |
Investment Thesis
CGI Inc. stands out with a Quality rating of 7.0 and an intrinsic value of $149.3, suggesting significant undervaluation for this $18.5B market cap leader in IT and business consulting services. Generating CA$16.2B in revenue and CA$2,258.9M in Free Cash Flow (14.0% FCF margin), the company boasts 8.9% revenue growth, a strong 17.9% ROIC, and 20.5% gross margin. Despite a -27.8% 1Y return, its balanced 48.4% Total Debt to Equity supports sustained profitability in a sector demanding reliable service delivery.
This positions GIB as a core holding in service providers stock picks, with metrics underscoring efficient capital allocation and growth potential in digital transformation demands.
Key Catalysts
- 8.9% revenue growth driving scalable operations
- 17.9% ROIC indicating superior capital efficiency
- 14.0% FCF margin enabling reinvestment and shareholder returns
- CA$2,258.9M free cash flow for strategic expansions
Risk Factors
- -27.8% 1Y return reflecting short-term market pressures
- Moderate 48.4% debt-to-equity requiring monitoring in rising rates
- Dependency on IT services contracts amid economic slowdowns
Stock #2: GFL Environmental Inc. (GFL)
| Metric | Value |
|---|---|
| Market Cap | $17.3B |
| Quality Rating | 5.7 |
| Intrinsic Value | $37.4 |
| 1Y Return | -1.5% |
| Revenue | CA$6,915.4M |
| Free Cash Flow | CA$225.7M |
| Revenue Growth | (10.9%) |
| FCF margin | 3.3% |
| Gross margin | 20.5% |
| ROIC | 1.5% |
| Total Debt to Equity | 100.9% |
Investment Thesis
GFL Environmental Inc. offers a Quality rating of 5.7 and intrinsic value of $37.4 for its $17.3B market cap in waste management services. With CA$6,915.4M revenue and CA$225.7M Free Cash Flow (3.3% FCF margin), it faces headwinds from 10.9% revenue growth but maintains 20.5% gross margin, 1.5% ROIC, and elevated 100.9% Total Debt to Equity. The -1.5% 1Y return highlights stability in essential services, positioning GFL for recovery in environmental solutions.
Analysis reveals potential in undervalued stocks to buy within commodities-adjacent services, balancing scale with turnaround prospects.
Key Catalysts
- Essential waste services ensuring recurring revenue
- 20.5% gross margin supporting cost controls
- CA$225.7M FCF for debt management
- Sector tailwinds in sustainability regulations
Risk Factors
- 10.9% revenue contraction signaling operational challenges
- High 100.9% debt-to-equity amplifying leverage risks
- Low 1.5% ROIC indicating capital inefficiencies
- Minimal -1.5% 1Y return amid competitive pressures
Stock #3: Pentair plc (PNR)
| Metric | Value |
|---|---|
| Market Cap | $17.1B |
| Quality Rating | 6.5 |
| Intrinsic Value | $120.4 |
| 1Y Return | 1.8% |
| Revenue | $4,128.4M |
| Free Cash Flow | $782.7M |
| Revenue Growth | 0.8% |
| FCF margin | 19.0% |
| Gross margin | 40.1% |
| ROIC | 13.4% |
| Total Debt to Equity | 41.8% |
Investment Thesis
Pentair plc, with a $17.1B market cap, earns a 6.5 Quality rating and $120.4 intrinsic value, emphasizing water solutions services. Key metrics include $4,128.4M revenue, $782.7M Free Cash Flow (19.0% FCF margin), 0.8% revenue growth, 40.1% gross margin, 13.4% ROIC, and conservative 41.8% Total Debt to Equity. A modest 1.8% 1Y return underscores steady performance in industrial services.
This makes PNR a defensive pick in stock picks for commodities and infrastructure exposure.
Key Catalysts
- High 19.0% FCF margin for financial flexibility
- 40.1% gross margin reflecting pricing power
- 13.4% ROIC in core water management
- $782.7M FCF supporting dividends and growth
Risk Factors
- Sluggish 0.8% revenue growth limiting acceleration
- 41.8% debt-to-equity in cyclical markets
- Low 1.8% 1Y return versus peers
- Exposure to industrial slowdowns
Stock #4: Gartner, Inc. (IT)
| Metric | Value |
|---|---|
| Market Cap | $15.7B |
| Quality Rating | 7.4 |
| Intrinsic Value | $401.2 |
| 1Y Return | -61.8% |
| Revenue | $6,459.8M |
| Free Cash Flow | $1,215.9M |
| Revenue Growth | 5.2% |
| FCF margin | 18.8% |
| Gross margin | 68.2% |
| ROIC | 22.9% |
| Total Debt to Equity | 512.1% |
Investment Thesis
Gartner, Inc. leads with a top 7.4 Quality rating and $401.2 intrinsic value at $15.7B market cap in research and advisory services. It reports $6,459.8M revenue, $1,215.9M Free Cash Flow (18.8% FCF margin), 5.2% revenue growth, exceptional 68.2% gross margin, 22.9% ROIC, though with high 512.1% Total Debt to Equity. The -61.8% 1Y return suggests deep undervaluation in IT consulting.
Ideal for Gartner stock analysis in technology services watchlists.
Key Catalysts
- 22.9% ROIC showcasing elite efficiency
- 68.2% gross margin from high-value subscriptions
- 5.2% revenue growth in analytics demand
- $1,215.9M FCF for tech investments
Risk Factors
- Steep -61.8% 1Y return indicating volatility
- Elevated 512.1% debt-to-equity posing refinancing risks
- Reliance on enterprise contracts
- Margin pressures from competition
Stock #5: Genpact Limited (G)
| Metric | Value |
|---|---|
| Market Cap | $7,737.8M |
| Quality Rating | 6.6 |
| Intrinsic Value | $64.6 |
| 1Y Return | -8.6% |
| Revenue | $5,009.3M |
| Free Cash Flow | $648.5M |
| Revenue Growth | 7.4% |
| FCF margin | 12.9% |
| Gross margin | 35.8% |
| ROIC | 15.9% |
| Total Debt to Equity | 22.9% |
Investment Thesis
Genpact Limited, at $7,737.8M market cap, holds a 6.6 Quality rating and $64.6 intrinsic value in business process services. Metrics feature $5,009.3M revenue, $648.5M Free Cash Flow (12.9% FCF margin), 7.4% revenue growth, 35.8% gross margin, 15.9% ROIC, and low 22.9% Total Debt to Equity. -8.6% 1Y return points to rebound potential.
Strong for Genpact analysis in outsourcing opportunities.
Key Catalysts
- 7.4% revenue growth in digital services
- 15.9% ROIC for competitive edge
- Low 22.9% debt enabling agility
- 12.9% FCF margin sustaining operations
Risk Factors
- -8.6% 1Y return from market rotations
- Offshore services exposure to geopolitical shifts
- 35.8% gross margin vulnerable to wage inflation
- Contract concentration risks
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Stock #6: 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's $7,491.7M market cap reflects a 5.9 Quality rating and $113.3 intrinsic value in engineering services. It delivers $6,494.7M revenue, $382.8M Free Cash Flow (5.9% FCF margin), 0.2% revenue growth, 22.0% gross margin, 6.9% ROIC, and 51.9% Total Debt to Equity. -11.1% 1Y return highlights value in defense and infrastructure.
Key in PSN stock picks for government contracts.
Key Catalysts
- Stable 22.0% gross margin in project-based work
- $382.8M FCF for backlog execution
- 6.9% ROIC improving with scale
- Infrastructure spending tailwinds
Risk Factors
- Flat 0.2% revenue growth
- -11.1% 1Y return signaling delays
- 51.9% debt in bid-heavy business
- Government budget uncertainties
Stock #7: Element Solutions Inc (ESI)
| Metric | Value |
|---|---|
| Market Cap | $7,054.7M |
| Quality Rating | 6.5 |
| Intrinsic Value | $23.0 |
| 1Y Return | 13.1% |
| Revenue | $2,499.2M |
| Free Cash Flow | $268.3M |
| Revenue Growth | 3.9% |
| FCF margin | 10.7% |
| Gross margin | 42.0% |
| ROIC | 9.1% |
| Total Debt to Equity | 60.9% |
Investment Thesis
Element Solutions Inc, with $7,054.7M market cap, scores 6.5 Quality rating and $23.0 intrinsic value in specialty chemicals services. Highlights: $2,499.2M revenue, $268.3M Free Cash Flow (10.7% FCF margin), 3.9% revenue growth, 42.0% gross margin, 9.1% ROIC, 60.9% Total Debt to Equity. Positive 13.1% 1Y return differentiates it.
Attractive for ESI investment opportunities.
Key Catalysts
- 13.1% 1Y return momentum
- 42.0% gross margin in niche markets
- 3.9% revenue growth
- 10.7% FCF margin for R&D
Risk Factors
- 60.9% debt-to-equity in cyclical chemicals
- Moderate 9.1% ROIC
- Commodity price volatility
- Acquisition integration risks
Stock #8: MakeMyTrip Limited (MMYT)
| Metric | Value |
|---|---|
| Market Cap | $6,058.5M |
| Quality Rating | 7.1 |
| Intrinsic Value | $23.7 |
| 1Y Return | -44.0% |
| Revenue | $1,039.3M |
| Free Cash Flow | $133.4M |
| Revenue Growth | 11.1% |
| FCF margin | 12.8% |
| Gross margin | 64.3% |
| ROIC | 20.6% |
| Total Debt to Equity | (602.5%) |
Investment Thesis
MakeMyTrip Limited's $6,058.5M market cap features 7.1 Quality rating and $23.7 intrinsic value in travel services. Data shows $1,039.3M revenue, $133.4M Free Cash Flow (12.8% FCF margin), 11.1% revenue growth, 64.3% gross margin, 20.6% ROIC, and negative 602.5% Total Debt to Equity indicating net cash. -44.0% 1Y return screams undervaluation.
Prime for MMYT stock analysis in recovery plays.
Key Catalysts
- 11.1% revenue growth post-travel rebound
- 20.6% ROIC excellence
- 64.3% gross margin scalability
- Net cash position (negative debt)
Risk Factors
- Sharp -44.0% 1Y return volatility
- Travel sector cyclicality
- Regional market dependence
- Currency fluctuations
Stock #9: Kyndryl Holdings, Inc. (KD)
| Metric | Value |
|---|---|
| Market Cap | $5,428.3M |
| Quality Rating | 6.4 |
| Intrinsic Value | $77.9 |
| 1Y Return | -39.0% |
| Revenue | $15.0B |
| Free Cash Flow | $514.0M |
| Revenue Growth | (1.9%) |
| FCF margin | 3.4% |
| Gross margin | 21.2% |
| ROIC | 10.3% |
| Total Debt to Equity | (42.4%) |
Investment Thesis
Kyndryl Holdings, Inc. at $5,428.3M market cap has 6.4 Quality rating and $77.9 intrinsic value in IT infrastructure services. Metrics: $15.0B revenue, $514.0M Free Cash Flow (3.4% FCF margin), 1.9% revenue growth, 21.2% gross margin, 10.3% ROIC, negative 42.4% Total Debt to Equity. -39.0% 1Y return offers entry.
Fits KD analysis for spin-off value.
Key Catalysts
- Massive $15.0B revenue scale
- 10.3% ROIC turnaround
- Net cash flexibility
- Cloud migration demand
Risk Factors
- 1.9% revenue decline
- -39.0% 1Y return pressures
- Low 3.4% FCF margin
- Post-spin stabilization
Stock #10: Graham Holdings Company (GHC)
| Metric | Value |
|---|---|
| Market Cap | $4,969.1M |
| Quality Rating | 6.2 |
| Intrinsic Value | $2,310.5 |
| 1Y Return | 25.4% |
| Revenue | $2,411.7M |
| Free Cash Flow | $361.4M |
| Revenue Growth | (48.8%) |
| FCF margin | 15.0% |
| Gross margin | 31.0% |
| ROIC | (0.9%) |
| Total Debt to Equity | 25.8% |
Investment Thesis
Graham Holdings Company's $4,969.1M market cap yields 6.2 Quality rating and sky-high $2,310.5 intrinsic value in diversified education/media services. It has $2,411.7M revenue, $361.4M Free Cash Flow (15.0% FCF margin), 48.8% revenue growth, 31.0% gross margin, negative 0.9% ROIC, low 25.8% Total Debt to Equity. Strong 25.4% 1Y return caps the list.
Excellent for GHC stock picks.
Key Catalysts
- 25.4% 1Y return outperformance
- 15.0% FCF margin resilience
- Low 25.8% debt safety
- Diversified revenue streams
Risk Factors
- Sharp 48.8% revenue drop
- Negative 0.9% ROIC
- Education sector regulations
- Cyclical media exposure
Portfolio Diversification Insights
These 10 best stocks cluster in service providers (IT consulting like GIB/IT, environmental GFL, research Gartner, engineering PSN, chemicals ESI, travel MMYT, infrastructure KD/GHC), offering sector allocation across technology 50%, industrials/commodities 30%, consumer services 20%. High-ROIC leaders (IT 22.9%, MMYT 20.6%) complement steady cash generators (GIB, PNR), reducing correlation risks. GIB and Genpact provide growth stability, while PNR/GFL add defensive qualities; avoid overexposure to debt-heavy IT 512% by balancing with net-cash MMYT/KD. This mix enhances portfolio diversification for undervalued stock watchlists.
Market Timing & Entry Strategies
Consider positions during sector rotations toward value, post-earnings dips (e.g., targeting -1Y return stocks like GIB/IT), or when intrinsic value gaps widen >20%. Dollar-cost average into high-Quality (7.0+) like GIB/IT for 6-12 month holds, monitoring ROIC >10% and FCF growth. Enter on revenue stabilization signals, using 5-10% portfolio weights; scale out if debt metrics deteriorate.
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FAQ Section
How were these stocks selected?
Selected via ValueSense methodology emphasizing intrinsic value upside, Quality ratings 5.7-7.4, ROIC, FCF margins, and growth for service providers, ensuring balanced stock watchlist potential.
What's the best stock from this list?
Gartner (IT) tops with 7.4 Quality rating, 22.9% ROIC, 68.2% margins, despite volatility—strongest for IT analysis in research services.
Should I buy all these stocks or diversify?
Diversify across the 10 for sector balance (tech/industrials/services); allocate 5-15% per stock to mitigate risks like debt in GFL/IT while capturing GIB/PNR stability.
What are the biggest risks with these picks?
Key concerns: negative 1Y returns (e.g., IT -61.8%), high debt (IT 512%, GFL 100.9%), revenue declines (GHC -48.8%, GFL -10.9%), and sector cyclicality.
When is the best time to invest in these stocks?
Optimal during market dips widening intrinsic value gaps, post-positive earnings on growth metrics, or value rotations—monitor FCF and ROIC for entry signals.