10 Best Undervalued Smallmid Cap Moat Stocks for February 2026
Welcome to the Value Sense Blog, your resource for insights on the stock market! At Value Sense, we focus on intrinsic value tools and offer stock ideas with undervalued companies. Dive into our research products and learn more about our unique approach at valuesense.io
Explore diverse stock ideas covering technology, healthcare, and commodities sectors. Our insights are crafted to help investors spot opportunities in undervalued growth stocks, enhancing potential returns. Visit us to see evaluations and in-depth market research.
Market Overview & Selection Criteria
In the current market environment, small and mid-cap stocks around $8-10B market caps present compelling undervalued stock opportunities, particularly those with strong intrinsic value estimates exceeding current trading levels. ValueSense analysis highlights companies demonstrating robust free cash flow (FCF) generation, healthy margins, and high ROIC, selected based on quality ratings above 5.8, positive revenue trajectories where applicable, and significant upside to intrinsic value. These picks emphasize financial services, energy, healthcare, REITs, and industrials, focusing on firms with competitive moats evidenced by superior FCF margins and growth potential. Methodology prioritizes ValueSense intrinsic value models, balancing growth metrics like revenue expansion with efficiency indicators such as gross margins over 40% and manageable debt-to-equity ratios.
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, stands out in ValueSense analysis for its solid quality rating of 6.7 and an intrinsic value estimate of $212.4, suggesting substantial undervaluation. The company generates $4,230.0M in revenue with 6.7% growth, supported by $666.0M in free cash flow at a 15.7% FCF margin and impressive 62.2% gross margin. Its ROIC of 35.5% reflects efficient capital allocation, while a 13.6% 1Y return underscores resilience in banking operations. This positions WTFC as a strong candidate for investors analyzing best value stocks in financials.
Key Catalysts
- Steady 6.7% revenue growth driving scalable operations
- High 35.5% ROIC indicating superior returns on invested capital
- Healthy 62.2% gross margin supporting profitability
Risk Factors
- 61.7% total debt to equity requiring monitoring in rising rate environments
- Sector sensitivity to economic cycles impacting loan portfolios
Stock #2: 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, quality rating of 6.5, and intrinsic value of $203.6 per ValueSense data, highlighting undervaluation potential. With explosive 68.5% revenue growth to $4,443.7M and $882.8M free cash flow at 19.9% FCF margin, alongside 54.4% gross margin and 24.6% ROIC, UMBF demonstrates exceptional efficiency. Despite a modest 7.3% 1Y return, these metrics position it as a top financial stock pick for growth-oriented analysis.
Key Catalysts
- Remarkable 68.5% revenue growth signaling expansion momentum
- Strong 19.9% FCF margin and $882.8M cash flow for reinvestment
- Low 6.2% debt to equity enhancing balance sheet strength
Risk Factors
- High revenue growth volatility post-surge
- Competitive pressures in regional banking
Stock #3: 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 $9,542.5M market cap, earns a 6.9 quality rating and $381.9 intrinsic value, indicating room for appreciation. Revenue of $4,537.7M grew 17.6%, backed by $534.5M free cash flow (11.8% margin), 48.1% gross margin, and 20.5% ROIC. A -7.6% 1Y return may reflect temporary headwinds, but robust metrics make AYI a key undervalued stock in lighting and industrials.
Key Catalysts
- 17.6% revenue growth fueling operational scale
- Solid 20.5% ROIC for sustained efficiency
- Improving margins in core manufacturing
Risk Factors
- 32.6% debt to equity amid supply chain risks
- Cyclical demand in industrials sector
Stock #4: 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 $9,521.4M market cap, shows a 6.6 quality rating and $48.1 intrinsic value. It boasts $9,641.0M revenue (4.9% growth), exceptional $1,903.0M free cash flow (19.7% margin), 54.6% gross margin, and 25.8% ROIC, with 14.9% 1Y return. These figures underscore APA's strength as a commodities stock pick with cash flow durability.
Key Catalysts
- Massive $1,903.0M FCF supporting dividends and buybacks
- 25.8% ROIC in volatile energy markets
- Stable 54.6% gross margin
Risk Factors
- 40.5% debt to equity exposed to oil price swings
- Commodity dependency on global demand
Stock #5: 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), a technology firm at $9,512.4M market cap, has a 6.9 quality rating and $431.9 intrinsic value. Revenue reached $2,360.7M with 5.9% growth, $647.4M free cash flow (27.4% margin), 52.3% gross margin, and 17.5% ROIC, despite -45.5% 1Y return signaling a potential rebound in stock watchlist considerations.
Key Catalysts
- High 27.4% FCF margin for tech resilience
- Steady 5.9% revenue growth in data services
- 52.3% gross margin reflecting pricing power
Risk Factors
- Elevated 72.0% debt to equity
- Recent negative returns amid market rotations
Most investors waste time on the wrong metrics. We've spent 10,000+ hours perfecting our value investing engine to find what actually matters.
Want to see what we'll uncover next - before everyone else does?
Find Hidden Gems First!
Stock #6: 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) offers $9,359.1M market cap, 5.8 quality rating, and $34.8 intrinsic value. With $2,812.3M revenue (-4.9% growth), $522.3M free cash flow (18.6% margin), 59.3% gross margin, and 16.5% ROIC, plus 5.3% 1Y return and 0.0% debt to equity, it appeals for conservative banking stock analysis.
Key Catalysts
- Zero debt to equity for pristine balance sheet
- 18.6% FCF margin despite revenue dip
- High 59.3% gross margin
Risk Factors
- Negative 4.9% revenue growth
- Lower 5.8 quality rating
Stock #7: Federal Realty Investment Trust (FRT)
| Metric | Value |
|---|---|
| Market Cap | $8,944.8M |
| Quality Rating | 6.6 |
| Intrinsic Value | $118.1 |
| 1Y Return | -3.3% |
| Revenue | $1,255.0M |
| Free Cash Flow | $532.8M |
| Revenue Growth | 6.1% |
| FCF margin | 42.5% |
| Gross margin | 67.3% |
| ROIC | 426.8% |
| Total Debt to Equity | 138.8% |
Investment Thesis
Federal Realty Investment Trust (FRT), a REIT with $8,944.8M market cap, scores 6.6 quality and $118.1 intrinsic value. It reports $1,255.0M revenue (6.1% growth), $532.8M free cash flow (42.5% margin), 67.3% gross margin, standout 426.8% ROIC, and -3.3% 1Y return, ideal for REIT stock picks.
Key Catalysts
- Exceptional 426.8% ROIC from property efficiency
- 42.5% FCF margin and 6.1% growth
- Strong 67.3% gross margin
Risk Factors
- High 138.8% debt to equity typical for REITs
- Interest rate sensitivity
Stock #8: Primerica, Inc. (PRI)
| Metric | Value |
|---|---|
| Market Cap | $8,431.0M |
| Quality Rating | 6.9 |
| Intrinsic Value | $494.8 |
| 1Y Return | -8.3% |
| Revenue | $3,226.0M |
| Free Cash Flow | $831.0M |
| Revenue Growth | 6.6% |
| FCF margin | 25.8% |
| Gross margin | 41.3% |
| ROIC | 27.0% |
| Total Debt to Equity | 82.2% |
Investment Thesis
Primerica, Inc. (PRI) at $8,431.0M market cap has 6.9 quality rating and $494.8 intrinsic value. Revenue of $3,226.0M grew 6.6%, with $831.0M free cash flow (25.8% margin), 41.3% gross margin, 27.0% ROIC, and -8.3% 1Y return, positioning it in insurance stock opportunities.
Key Catalysts
- 25.8% FCF margin with $831.0M generation
- 27.0% ROIC and 6.6% revenue growth
- Stable financial services model
Risk Factors
- 82.2% debt to equity
- Recent performance dip
Stock #9: Halozyme Therapeutics, Inc. (HALO)
| Metric | Value |
|---|---|
| Market Cap | $8,379.7M |
| Quality Rating | 7.9 |
| Intrinsic Value | $77.4 |
| 1Y Return | 27.1% |
| Revenue | $1,242.9M |
| Free Cash Flow | $602.4M |
| Revenue Growth | 31.2% |
| FCF margin | 48.5% |
| Gross margin | 84.5% |
| ROIC | 43.7% |
| Total Debt to Equity | 299.8% |
Investment Thesis
Halozyme Therapeutics, Inc. (HALO), healthcare standout with $8,379.7M market cap, leads with 7.9 quality rating and $77.4 intrinsic value. It achieved $1,242.9M revenue (31.2% growth), $602.4M free cash flow (48.5% margin), 84.5% gross margin, 43.7% ROIC, and 27.1% 1Y return—top healthcare stock pick.
Key Catalysts
- Stellar 31.2% revenue growth and 27.1% 1Y return
- 48.5% FCF margin, 84.5% gross margin
- Highest 7.9 quality and 43.7% ROIC
Risk Factors
- Very high 299.8% debt to equity
- Biotech regulatory risks
Stock #10: Agree Realty Corporation (ADC)
| Metric | Value |
|---|---|
| Market Cap | $7,927.4M |
| Quality Rating | 6.5 |
| Intrinsic Value | $120.8 |
| 1Y Return | 2.7% |
| Revenue | $688.6M |
| Free Cash Flow | $484.2M |
| Revenue Growth | 14.7% |
| FCF margin | 70.3% |
| Gross margin | 89.0% |
| ROIC | 35.2% |
| Total Debt to Equity | 58.2% |
Investment Thesis
Agree Realty Corporation (ADC), REIT with $7,927.4M market cap, holds 6.5 quality and $120.8 intrinsic value. Revenue grew 14.7% to $688.6M, with $484.2M free cash flow (70.3% margin), 89.0% gross margin, 35.2% ROIC, and 2.7% 1Y return, strong for value REITs.
Key Catalysts
- Outstanding 70.3% FCF margin and 89.0% gross margin
- 14.7% revenue growth
- Efficient 35.2% ROIC
Risk Factors
- 58.2% debt to equity
- Retail real estate exposure
Portfolio Diversification Insights
This stock watchlist spans financials (WTFC, UMBF, ONB, PRI ~40%), energy (APA ~10%), industrials (AYI ~10%), technology (FDS ~10%), healthcare (HALO ~10%), and REITs (FRT, ADC ~20%), reducing sector-specific risks. High ROIC leaders like FRT 426.8% complement growth engines like HALO (31.2% revenue), while low-debt ONB balances leveraged plays like HALO. FCF powerhouses (e.g., APA's $1.9B) provide income stability, fostering a diversified investment opportunities portfolio with average quality ~6.6 and strong intrinsic upside.
Market Timing & Entry Strategies
Consider positions during sector rotations favoring value stocks, such as post-earnings dips or when intrinsic value gaps widen (e.g., HALO's high growth, FDS's rebound potential). Dollar-cost average into financials like WTFC amid stable rates, energy like APA on oil uptrends, and REITs like FRT/ADC for yield. Monitor revenue growth and debt levels quarterly; enter on 10-20% discounts to intrinsic value for optimal stock picks timing.
Explore More Investment Opportunities
For investors seeking undervalued companies with high fundamental quality, our analytics team provides curated stock lists:
📌 50 Undervalued Stocks (Best overall value plays for 2025)
📌 50 Undervalued Dividend Stocks (For income-focused investors)
📌 50 Undervalued Growth Stocks (High-growth potential with strong fundamentals)
🔍 Check out these stocks on the Value Sense platform for free!
More Articles You Might Like
- Nelson Peltz - Trian Fund Management Portfolio Q3'2025: Top Holdings & Recent Changes
- Principles for Dealing with the Changing World Order by Ray Dalio
- The Ascent of Money by Niall Ferguson
- Principles for Navigating Big Debt Crises by Ray Dalio
- Influence: The Psychology of Persuasion by Robert B. Cialdini Ph.D.
FAQ Section
How were these stocks selected?
These top stocks to buy now were chosen using ValueSense criteria: quality ratings 5.8+, high intrinsic value upside, strong FCF margins (>11%), and ROIC >16%, focusing on small-mid caps ~$8-10B for best value stocks.
What's the best stock from this list?
Halozyme Therapeutics (HALO) leads with 7.9 quality, 31.2% revenue growth, 27.1% 1Y return, and 48.5% FCF margin, though all offer unique stock analysis merits like FRT's 426.8% ROIC.
Should I buy all these stocks or diversify?
Diversification across sectors (financials, energy, healthcare, REITs) mitigates risks; allocate based on investment opportunities like 40% financials, 20% REITs, avoiding over-concentration.
What are the biggest risks with these picks?
Key concerns include high debt-to-equity (e.g., HALO 299.8%, FRT 138.8%), sector cycles (energy volatility for APA), and growth slowdowns (ONB -4.9% revenue), per ValueSense data.
When is the best time to invest in these stocks?
Optimal entry aligns with market dips widening intrinsic value gaps, stable rates for financials/REITs, or commodity rallies for APA; use ongoing stock watchlist monitoring for timing.