10 Best Smallmid Cap Moat Stocks for February 2026
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Market Overview & Selection Criteria
In the current market environment, small and mid-cap stocks around $9-10B market caps present compelling opportunities for value-focused analysis, particularly those showing strong intrinsic value upside, solid quality ratings, and robust free cash flow generation. These stock picks were selected using ValueSense's proprietary methodology, emphasizing companies with high ROIC, healthy FCF margins, and intrinsic values significantly above implied market prices—indicating potential undervaluation. Criteria include Quality ratings above 5.8, positive revenue growth where applicable, and balanced debt levels, drawn exclusively from ValueSense data to highlight best value stocks across financials, real estate, energy, industrials, and insurance sectors. This stock watchlist prioritizes educational insights into undervalued stocks to buy for diversified portfolios.
Featured Stock Analysis
Stock #1: Wintrust Financial Corporation (WTFC)
| Metric | Value |
|---|---|
| Market Cap | $9,789.0M |
| Quality Rating | 6.7 |
| Intrinsic Value | $212.4 |
| 1Y Return | 13.6% |
| Revenue | $4,230.0M |
| Free Cash Flow | $666.0M |
| Revenue Growth | 6.7% |
| FCF margin | 15.7% |
| Gross margin | 62.2% |
| ROIC | 35.5% |
| Total Debt to Equity | 61.7% |
Investment Thesis
Wintrust Financial Corporation (WTFC), a financial services provider with a Market Cap of $9,789.0M, demonstrates solid fundamentals in ValueSense analysis. Its Quality rating of 6.7 reflects efficient operations, supported by Revenue of $4,230.0M and Free Cash Flow of $666.0M. The Intrinsic value of $212.4 suggests significant upside potential compared to current valuation, bolstered by a 1Y Return of 13.6% and Revenue growth of 6.7%. Strong margins including FCF margin at 15.7%, Gross margin of 62.2%, and exceptional ROIC of 35.5% position WTFC as a standout in regional banking, with manageable Total Debt to Equity at 61.7%. This analysis highlights WTFC's ability to generate consistent cash flows in a competitive sector.
Key Catalysts
- Steady Revenue growth of 6.7% supports expansion in core banking operations
- High ROIC of 35.5% indicates efficient capital allocation
- Robust Gross margin of 62.2% and positive 1Y Return of 13.6% signal operational strength
- Strong Free Cash Flow of $666.0M enables dividends and buybacks
Risk Factors
- Total Debt to Equity at 61.7% could pressure finances in rising rate environments
- Sector sensitivity to economic downturns in financial services
- Moderate FCF margin of 15.7% relative to peers may limit flexibility
Stock #2: EastGroup Properties, Inc. (EGP)
| Metric | Value |
|---|---|
| Market Cap | $9,580.8M |
| Quality Rating | 6.3 |
| Intrinsic Value | $168.1 |
| 1Y Return | 9.5% |
| Revenue | $696.2M |
| Free Cash Flow | $397.2M |
| Revenue Growth | 11.6% |
| FCF margin | 57.1% |
| Gross margin | 57.8% |
| ROIC | 286.1% |
| Total Debt to Equity | 43.3% |
Investment Thesis
EastGroup Properties, Inc. (EGP), a real estate investment trust with Market Cap $9,580.8M, stands out for its impressive efficiency metrics per ValueSense data. Quality rating of 6.3 pairs with an Intrinsic value of $168.1, alongside Revenue of $696.2M and exceptional Free Cash Flow of $397.2M. Revenue growth of 11.6% and a stellar 1Y Return of 9.5% underscore growth in industrial properties, with FCF margin at 57.1%, Gross margin 57.8%, and extraordinary ROIC of 286.1%. Total Debt to Equity of 43.3% remains prudent, making EGP a key pick for real estate stock analysis in this watchlist.
Key Catalysts
- Exceptional ROIC of 286.1% highlights superior asset utilization
- High FCF margin of 57.1% and Revenue growth of 11.6% drive sustainability
- Strong Gross margin of 57.8% supports profitability in logistics real estate
- Positive 1Y Return of 9.5% reflects market resilience
Risk Factors
- Real estate sector vulnerability to interest rate hikes
- Total Debt to Equity at 43.3% requires monitoring amid volatility
- Dependence on industrial demand cycles
Stock #3: UMB Financial Corporation (UMBF)
| Metric | Value |
|---|---|
| Market Cap | $9,544.8M |
| Quality Rating | 6.5 |
| Intrinsic Value | $203.6 |
| 1Y Return | 7.3% |
| Revenue | $4,443.7M |
| Free Cash Flow | $882.8M |
| Revenue Growth | 68.5% |
| FCF margin | 19.9% |
| Gross margin | 54.4% |
| ROIC | 24.6% |
| Total Debt to Equity | 6.2% |
Investment Thesis
UMB Financial Corporation (UMBF) features a Market Cap of $9,544.8M and Quality rating of 6.5, with standout Revenue of $4,443.7M and Free Cash Flow of $882.8M. ValueSense's Intrinsic value estimate of $203.6 points to undervaluation, despite a modest 1Y Return of 7.3%. Explosive Revenue growth of 68.5%, FCF margin 19.9%, Gross margin 54.4%, and ROIC 24.6% demonstrate strength, aided by low Total Debt to Equity of 6.2%. This positions UMBF favorably in financial stock picks.
Key Catalysts
- Remarkable Revenue growth of 68.5% signals acquisition or organic expansion
- High Free Cash Flow of $882.8M bolsters balance sheet
- Low Total Debt to Equity of 6.2% enhances financial stability
- Solid ROIC of 24.6% for efficient returns
Risk Factors
- Growth sustainability post-68.5% surge needs validation
- Banking sector exposure to credit cycles
- Modest 1Y Return of 7.3% trails some peers
Stock #4: Acuity Brands, Inc. (AYI)
| Metric | Value |
|---|---|
| Market Cap | $9,542.5M |
| Quality Rating | 6.9 |
| Intrinsic Value | $381.9 |
| 1Y Return | -7.6% |
| Revenue | $4,537.7M |
| Free Cash Flow | $534.5M |
| Revenue Growth | 17.6% |
| FCF margin | 11.8% |
| Gross margin | 48.1% |
| ROIC | 20.5% |
| Total Debt to Equity | 32.6% |
Investment Thesis
Acuity Brands, Inc. (AYI), in the industrials sector with Market Cap $9,542.5M, earns a strong Quality rating of 6.9. Intrinsic value of $381.9 highlights potential, supported by Revenue $4,537.7M, Free Cash Flow $534.5M, and Revenue growth 17.6%. Despite a 1Y Return of -7.6%, metrics like FCF margin 11.8%, Gross margin 48.1%, ROIC 20.5%, and Total Debt to Equity 32.6% suggest recovery potential in lighting and building technologies.
Key Catalysts
- Strong Revenue growth of 17.6% in core operations
- High Quality rating 6.9 and Intrinsic value upside
- Healthy ROIC 20.5% for industrial efficiency
- Improving Free Cash Flow trajectory
Risk Factors
- Negative 1Y Return of -7.6% indicates recent pressures
- FCF margin 11.8% lower than peers
- Cyclical industrials demand
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Stock #5: APA Corporation (APA)
| Metric | Value |
|---|---|
| Market Cap | $9,521.4M |
| Quality Rating | 6.6 |
| Intrinsic Value | $48.1 |
| 1Y Return | 14.9% |
| Revenue | $9,641.0M |
| Free Cash Flow | $1,903.0M |
| Revenue Growth | 4.9% |
| FCF margin | 19.7% |
| Gross margin | 54.6% |
| ROIC | 25.8% |
| Total Debt to Equity | 40.5% |
Investment Thesis
APA Corporation (APA), an energy player with Market Cap $9,521.4M, shows Quality rating 6.6 and Intrinsic value $48.1. Key figures include Revenue $9,641.0M, massive Free Cash Flow $1,903.0M, Revenue growth 4.9%, 1Y Return 14.9%, FCF margin 19.7%, Gross margin 54.6%, ROIC 25.8%, and Total Debt to Equity 40.5%. This makes APA a top energy stock pick for commodities exposure.
Key Catalysts
- Highest Free Cash Flow $1,903.0M in the list
- Strong 1Y Return 14.9% amid energy demand
- Efficient ROIC 25.8% and margins
- Steady Revenue scale
Risk Factors
- Commodity price volatility
- Total Debt to Equity 40.5% in cyclical sector
- Modest Revenue growth 4.9%
Stock #6: FactSet Research Systems Inc. (FDS)
| Metric | Value |
|---|---|
| Market Cap | $9,512.4M |
| Quality Rating | 6.9 |
| Intrinsic Value | $431.9 |
| 1Y Return | -45.5% |
| Revenue | $2,360.7M |
| Free Cash Flow | $647.4M |
| Revenue Growth | 5.9% |
| FCF margin | 27.4% |
| Gross margin | 52.3% |
| ROIC | 17.5% |
| Total Debt to Equity | 72.0% |
Investment Thesis
FactSet Research Systems Inc. (FDS), Market Cap $9,512.4M, has Quality rating 6.9 and lofty Intrinsic value $431.9. Despite 1Y Return -45.5%, Revenue $2,360.7M, Free Cash Flow $647.4M, Revenue growth 5.9%, FCF margin 27.4%, Gross margin 52.3%, and ROIC 17.5% show resilience, with Total Debt to Equity 72.0%. Valuable for financial data stock analysis.
Key Catalysts
- High FCF margin 27.4% and Quality rating 6.9
- Stable Revenue growth 5.9% in tech services
- Strong cash generation potential
Risk Factors
- Sharp 1Y Return decline of -45.5%
- Elevated Total Debt to Equity 72.0%
- Competition in data analytics
Stock #7: Rexford Industrial Realty, Inc. (REXR)
| Metric | Value |
|---|---|
| Market Cap | $9,367.1M |
| Quality Rating | 6.9 |
| Intrinsic Value | $26.6 |
| 1Y Return | 2.8% |
| Revenue | $997.9M |
| Free Cash Flow | $206.7M |
| Revenue Growth | 10.4% |
| FCF margin | 20.7% |
| Gross margin | 77.5% |
| ROIC | 176.9% |
| Total Debt to Equity | 37.3% |
Investment Thesis
Rexford Industrial Realty, Inc. (REXR), Market Cap $9,367.1M, boasts Quality rating 6.9 and Intrinsic value $26.6. Metrics feature Revenue $997.9M, Free Cash Flow $206.7M, Revenue growth 10.4%, 1Y Return 2.8%, FCF margin 20.7%, top Gross margin 77.5%, ROIC 176.9%, Total Debt to Equity 37.3%.
Key Catalysts
- Outstanding ROIC 176.9% and Gross margin 77.5%
- Consistent Revenue growth 10.4%
- High-quality industrial REIT profile
Risk Factors
- Lower Intrinsic value relative to peers
- Real estate market shifts
- Modest 1Y Return 2.8%
Stock #8: Old National Bancorp (ONB)
| Metric | Value |
|---|---|
| Market Cap | $9,359.1M |
| Quality Rating | 5.8 |
| Intrinsic Value | $34.8 |
| 1Y Return | 5.3% |
| Revenue | $2,812.3M |
| Free Cash Flow | $522.3M |
| Revenue Growth | (4.9%) |
| FCF margin | 18.6% |
| Gross margin | 59.3% |
| ROIC | 16.5% |
| Total Debt to Equity | 0.0% |
Investment Thesis
Old National Bancorp (ONB), Market Cap $9,359.1M, has Quality rating 5.8, Intrinsic value $34.8, Revenue $2,812.3M, Free Cash Flow $522.3M, Revenue growth 4.9%, 1Y Return 5.3%, FCF margin 18.6%, Gross margin 59.3%, ROIC 16.5%, zero Total Debt to Equity 0.0%.
Key Catalysts
- Debt-free balance sheet at 0.0% Total Debt to Equity
- Solid Gross margin 59.3%
- Positive 1Y Return 5.3%
Risk Factors
- Negative Revenue growth 4.9%
- Lowest Quality rating 5.8
- Banking competition
Stock #9: Allison Transmission Holdings, Inc. (ALSN)
| Metric | Value |
|---|---|
| Market Cap | $9,206.3M |
| Quality Rating | 6.9 |
| Intrinsic Value | $96.8 |
| 1Y Return | -8.2% |
| Revenue | $3,069.0M |
| Free Cash Flow | $861.0M |
| Revenue Growth | (4.2%) |
| FCF margin | 28.1% |
| Gross margin | 48.3% |
| ROIC | 18.5% |
| Total Debt to Equity | 130.3% |
Investment Thesis
Allison Transmission Holdings, Inc. (ALSN), Market Cap $9,206.3M, scores Quality rating 6.9, Intrinsic value $96.8, Revenue $3,069.0M, Free Cash Flow $861.0M, Revenue growth 4.2%, 1Y Return -8.2%, FCF margin 28.1%, Gross margin 48.3%, ROIC 18.5%, Total Debt to Equity 130.3%.
Key Catalysts
- High FCF margin 28.1%
- Strong Quality rating 6.9
- Reliable Free Cash Flow $861.0M
Risk Factors
- High Total Debt to Equity 130.3%
- Negative Revenue growth 4.2% and 1Y Return
- Industrial cyclicality
Stock #10: Kinsale Capital Group, Inc. (KNSL)
| Metric | Value |
|---|---|
| Market Cap | $9,113.8M |
| Quality Rating | 6.6 |
| Intrinsic Value | $17.7K |
| 1Y Return | -9.9% |
| Revenue | $1,802.8M |
| Free Cash Flow | $961.5M |
| Revenue Growth | 18.1% |
| FCF margin | 53.3% |
| Gross margin | 43.1% |
| ROIC | 82.9% |
| Total Debt to Equity | 10.7% |
Investment Thesis
Kinsale Capital Group, Inc. (KNSL), Market Cap $9,113.8M, features Quality rating 6.6, exceptional Intrinsic value $17.7K, Revenue $1,802.8M, Free Cash Flow $961.5M, Revenue growth 18.1%, 1Y Return -9.9%, top FCF margin 53.3%, Gross margin 43.1%, ROIC 82.9%, low Total Debt to Equity 10.7%. A standout insurance pick.
Key Catalysts
- Highest Revenue growth 18.1% and FCF margin 53.3%
- Impressive ROIC 82.9%
- Low debt enhances stability
Risk Factors
- Negative 1Y Return -9.9%
- Insurance underwriting risks
- High Intrinsic value volatility potential
Portfolio Diversification Insights
This stock watchlist offers strong diversification across sectors: financials (WTFC, UMBF, ONB ~30%), real estate (EGP, REXR ~20%), energy (APA ~10%), industrials (AYI, ALSN ~20%), data/tech (FDS ~10%), and insurance (KNSL ~10%). High-ROIC names like EGP 286.1% and REXR 176.9% complement cash-rich APA and KNSL, balancing growth (UMBF 68.5% revenue) with stability (ONB 0% debt). Together, they reduce sector-specific risks while targeting intrinsic value upside, ideal for portfolio diversification in small-mid caps.
Market Timing & Entry Strategies
Consider positions during sector rotations favoring financials and industrials amid economic recovery signals, or energy dips for APA. Monitor ROIC leaders like EGP/REXR for real estate rebounds. Use dollar-cost averaging for laggards like FDS (-45.5% 1Y), entering on Free Cash Flow strength. Track Revenue growth trends—high performers like UMBF/KNSL for momentum, balanced debt profiles for stability. This educational framework aids timing investment opportunities without guarantees.
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FAQ Section
How were these stocks selected?
These 10 best stock picks were chosen based on ValueSense criteria like high Quality ratings (5.8-6.9), strong ROIC, FCF margins, and Intrinsic value upside, focusing on ~$9B market cap companies for small-mid cap exposure.
What's the best stock from this list?
Standouts include KNSL for 53.3% FCF margin and 18.1% growth, or EGP with 286.1% ROIC; selection depends on sector preference in this stock watchlist.
Should I buy all these stocks or diversify?
Diversification across financials, real estate, and energy reduces risk; allocate based on portfolio diversification insights rather than concentrating in one area.
What are the biggest risks with these picks?
Key concerns: debt levels (ALSN 130.3%), negative returns (FDS -45.5%), revenue declines (ONB -4.9%), and sector cycles like energy volatility for APA.
When is the best time to invest in these stocks?
Optimal during market dips highlighting intrinsic value gaps, or sector tailwinds; use market timing strategies like monitoring Revenue growth and economic indicators for entry.