10 Best Undervalued Stocks With Great Momentum for February 2026
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Market Overview & Selection Criteria
In the current market environment, investors are seeking undervalued stocks with great momentum amid volatility in tech, healthcare, and financial sectors. Value Sense's analysis highlights companies trading significantly below their intrinsic value, offering potential for long-term appreciation. These top stock picks were selected using Value Sense's machine learning-driven methodology, focusing on high Quality ratings, strong ROIC, robust revenue growth, and positive 1Y returns. Criteria include intrinsic value exceeding current implied prices, favorable FCF margins, and balanced debt-to-equity ratios. This stock watchlist emphasizes diversification across semiconductors, memory chips, e-commerce, biotech, and banking, drawn exclusively from Value Sense's pre-validated data for educational analysis.
Featured Stock Analysis
Stock #1: Taiwan Semiconductor Manufacturing Company Limited (TSM)
| Metric | Value |
|---|---|
| Market Cap | $1,730.0B |
| Quality Rating | 8.2 |
| Intrinsic Value | $484.8 |
| 1Y Return | 58.8% |
| Revenue | NT$3,818.9B |
| Free Cash Flow | NT$1,019.8B |
| Revenue Growth | 31.9% |
| FCF margin | 26.7% |
| Gross margin | 59.9% |
| ROIC | 38.2% |
| Total Debt to Equity | 18.2% |
Investment Thesis
Taiwan Semiconductor Manufacturing Company Limited (TSM) stands out with a Quality rating of 8.2 and an intrinsic value of $484.8, suggesting substantial undervaluation in the semiconductor space. The company boasts a massive Market Cap of $1,730.0B, impressive Revenue of NT$3,818.9B, and Free Cash Flow of NT$1,019.8B. With Revenue growth at 31.9%, FCF margin of 26.7%, Gross margin of 59.9%, and ROIC of 38.2%, TSM demonstrates exceptional operational efficiency and capital allocation. Its low Total Debt to Equity of 18.2% further underscores financial strength, complemented by a solid 1Y Return of 58.8%. This positions TSM as a core holding for investors analyzing semiconductor stock picks with sustained momentum.
Key Catalysts
- Explosive revenue growth of 31.9% driven by global chip demand
- High ROIC at 38.2%, indicating superior returns on invested capital
- Strong gross margin of 59.9% and healthy FCF margin of 26.7%
- Lowest debt-to-equity ratio at 18.2% among peers for stability
Risk Factors
- Exposure to geopolitical tensions in Taiwan region
- Cyclical semiconductor industry fluctuations
- Currency risks from NT$ reporting
Stock #2: Micron Technology, Inc. (MU)
| Metric | Value |
|---|---|
| Market Cap | $486.8B |
| Quality Rating | 8.2 |
| Intrinsic Value | $419.0 |
| 1Y Return | 348.5% |
| Revenue | $42.3B |
| Free Cash Flow | $17.3B |
| Revenue Growth | 45.4% |
| FCF margin | 40.9% |
| Gross margin | 45.3% |
| ROIC | 23.4% |
| Total Debt to Equity | 21.2% |
Investment Thesis
Micron Technology, Inc. (MU) earns a top Quality rating of 8.2 with an intrinsic value of $419.0, highlighting its appeal in memory chip production amid AI-driven demand. With a Market Cap of $486.8B, Revenue of $42.3B, and Free Cash Flow of $17.3B, MU shows explosive Revenue growth of 45.4%—the highest in this watchlist—and an outstanding 1Y Return of 348.5%. Metrics like FCF margin of 40.9%, Gross margin of 45.3%, ROIC of 23.4%, and Total Debt to Equity of 21.2% reflect robust profitability and low leverage. This makes MU a standout for best value stocks in technology with exceptional momentum.
Key Catalysts
- Record 1Y Return of 348.5% from memory demand surge
- Leading revenue growth at 45.4% and top FCF margin of 40.9%
- Strong ROIC of 23.4% supporting expansion
- Low debt-to-equity at 21.2% for financial flexibility
Risk Factors
- Volatility in memory chip pricing cycles
- Competition from other semiconductor giants like TSM
- Dependence on tech sector capex trends
Stock #3: Alibaba Group Holding Limited (BABA)
| Metric | Value |
|---|---|
| Market Cap | $399.0B |
| Quality Rating | 6.4 |
| Intrinsic Value | $299.8 |
| 1Y Return | 65.0% |
| Revenue | CN¥1,012.1B |
| Free Cash Flow | (CN¥26.9B) |
| Revenue Growth | 5.2% |
| FCF margin | (2.7%) |
| Gross margin | 41.2% |
| ROIC | 10.5% |
| Total Debt to Equity | 25.3% |
Investment Thesis
Alibaba Group Holding Limited (BABA) presents a Quality rating of 6.4 and intrinsic value of $299.8, offering value in e-commerce despite challenges. Its Market Cap is $399.0B, with Revenue of CN¥1,012.1B, though Free Cash Flow is negative at (CN¥26.9B) yielding a -2.7% FCF margin. Positive aspects include Gross margin of 41.2%, ROIC of 10.5%, Total Debt to Equity of 25.3%, and a 1Y Return of 65.0%. Revenue growth of 5.2% indicates steady operations, positioning BABA for analysis in undervalued stocks to buy within consumer tech.
Key Catalysts
- Solid 1Y Return of 65.0% amid market recovery
- Manageable debt-to-equity at 25.3%
- Stable gross margin of 41.2% from core e-commerce
- Potential rebound in revenue growth from China stimulus
Risk Factors
- Negative FCF of (CN¥26.9B) signaling cash burn
- Regulatory pressures in Chinese markets
- Slow revenue growth at 5.2% vs. peers
Stock #4: AbbVie Inc. (ABBV)
| Metric | Value |
|---|---|
| Market Cap | $392.2B |
| Quality Rating | 6.3 |
| Intrinsic Value | $302.5 |
| 1Y Return | 27.0% |
| Revenue | $59.6B |
| Free Cash Flow | $20.6B |
| Revenue Growth | 7.4% |
| FCF margin | 34.5% |
| Gross margin | 76.2% |
| ROIC | 12.0% |
| Total Debt to Equity | (2,645.0%) |
Investment Thesis
AbbVie Inc. (ABBV) features a Quality rating of 6.3 and intrinsic value of $302.5, appealing in healthcare with elite margins. Market Cap stands at $392.2B, Revenue at $59.6B, and Free Cash Flow at $20.6B, supporting Revenue growth of 7.4%, FCF margin of 34.5%, and unmatched Gross margin of 76.2%. ROIC is 12.0%, though Total Debt to Equity is exceptionally high at 2,645.0%. 1Y Return of 27.0% underscores resilience, ideal for healthcare stock picks seeking defensive value.
Key Catalysts
- Industry-leading gross margin of 76.2%
- Strong FCF generation at $20.6B and 34.5% margin
- Steady revenue growth of 7.4% from pharma pipeline
- Reliable 1Y Return of 27.0%
Risk Factors
- Extreme debt-to-equity ratio of 2,645.0%
- Patent cliffs on key drugs
- Regulatory scrutiny in biotech
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Stock #5: HSBC Holdings plc (HSBC)
| Metric | Value |
|---|---|
| Market Cap | $304.0B |
| Quality Rating | 5.1 |
| Intrinsic Value | $92.3 |
| 1Y Return | 76.3% |
| Revenue | $116.3B |
| Free Cash Flow | $0.0 |
| Revenue Growth | (44.8%) |
| FCF margin | 0.0% |
| Gross margin | 57.4% |
| ROIC | 166.8% |
| Total Debt to Equity | 49.4% |
Investment Thesis
HSBC Holdings plc (HSBC) has a Quality rating of 5.1 and intrinsic value of $92.3, providing global banking exposure. Market Cap is $304.0B, Revenue $116.3B, but Free Cash Flow is $0.0 with 0.0% margin and Revenue growth of 44.8%. Strengths include Gross margin of 57.4%, extraordinary ROIC of 166.8%, Total Debt to Equity of 49.4%, and 1Y Return of 76.3%, suiting financial stock analysis.
Key Catalysts
- Exceptional ROIC of 166.8%
- Strong 1Y Return of 76.3%
- Solid gross margin at 57.4%
- Moderate debt-to-equity of 49.4%
Risk Factors
- Negative revenue growth of 44.8%
- Zero Free Cash Flow
- Interest rate sensitivity in banking
Stock #6: The Goldman Sachs Group, Inc. (GS)
| Metric | Value |
|---|---|
| Market Cap | $290.5B |
| Quality Rating | 6.3 |
| Intrinsic Value | $1,040.9 |
| 1Y Return | 47.8% |
| Revenue | $125.1B |
| Free Cash Flow | ($30.4B) |
| Revenue Growth | (1.8%) |
| FCF margin | (24.3%) |
| Gross margin | 45.7% |
| ROIC | N/A |
| Total Debt to Equity | 495.2% |
Investment Thesis
The Goldman Sachs Group, Inc. (GS) scores a Quality rating of 6.3 with intrinsic value of $1,040.9, emphasizing investment banking prowess. Market Cap $290.5B, Revenue $125.1B, Free Cash Flow $30.4B at -24.3% margin, Revenue growth 1.8%. Gross margin 45.7%, high Total Debt to Equity 495.2%, and 1Y Return 47.8% highlight momentum in banking stock picks.
Key Catalysts
- High 1Y Return of 47.8%
- Elevated intrinsic value potential
- Resilient gross margin of 45.7%
- Trading and advisory revenue stability
Risk Factors
- Negative FCF of $30.4B
- Very high debt-to-equity at 495.2%
- Revenue contraction of 1.8%
Stock #7: Citigroup Inc. (C)
| Metric | Value |
|---|---|
| Market Cap | $209.7B |
| Quality Rating | 6.1 |
| Intrinsic Value | $134.1 |
| 1Y Return | 45.3% |
| Revenue | $168.3B |
| Free Cash Flow | ($97.5B) |
| Revenue Growth | (1.4%) |
| FCF margin | (57.9%) |
| Gross margin | 44.6% |
| ROIC | 33.1% |
| Total Debt to Equity | 334.8% |
Investment Thesis
Citigroup Inc. (C) offers a Quality rating of 6.1 and intrinsic value of $134.1 for diversified banking analysis. Market Cap $209.7B, Revenue $168.3B, Free Cash Flow $97.5B at -57.9% margin, Revenue growth 1.4%. Gross margin 44.6%, ROIC 33.1%, Total Debt to Equity 334.8%, with 1Y Return 45.3%.
Key Catalysts
- Solid ROIC of 33.1%
- 1Y Return of 45.3%
- Large-scale revenue base
- Global diversification
Risk Factors
- Severe FCF deficit of $97.5B
- High debt-to-equity 334.8%
- Slight revenue decline
Stock #8: Banco Santander, S.A. (SAN)
| Metric | Value |
|---|---|
| Market Cap | $189.4B |
| Quality Rating | 6.7 |
| Intrinsic Value | $17.3 |
| 1Y Return | 152.5% |
| Revenue | $75.9B |
| Free Cash Flow | $20.1B |
| Revenue Growth | (3.4%) |
| FCF margin | 26.5% |
| Gross margin | 63.0% |
| ROIC | 25.8% |
| Total Debt to Equity | 288.1% |
Investment Thesis
Banco Santander, S.A. (SAN) achieves Quality rating 6.7 and intrinsic value $17.3, with strong European banking metrics. Market Cap $189.4B, Revenue $75.9B, Free Cash Flow $20.1B at 26.5% margin, Revenue growth 3.4%. Gross margin 63.0%, ROIC 25.8%, Total Debt to Equity 288.1%, 1Y Return 152.5%.
Key Catalysts
- Top-tier 1Y Return of 152.5%
- Positive FCF $20.1B and 26.5% margin
- High gross margin 63.0%
- Competitive ROIC 25.8%
Risk Factors
- Elevated debt-to-equity 288.1%
- Revenue dip of 3.4%
- European economic headwinds
Stock #9: Uber Technologies, Inc. (UBER)
| Metric | Value |
|---|---|
| Market Cap | $166.9B |
| Quality Rating | 7.2 |
| Intrinsic Value | $164.2 |
| 1Y Return | 20.2% |
| Revenue | $49.6B |
| Free Cash Flow | $8,661.0M |
| Revenue Growth | 18.2% |
| FCF margin | 17.5% |
| Gross margin | 39.7% |
| ROIC | 91.6% |
| Total Debt to Equity | 41.8% |
Investment Thesis
Uber Technologies, Inc. (UBER) holds a Quality rating of 7.2 and intrinsic value $164.2 in mobility tech. Market Cap $166.9B, Revenue $49.6B, Free Cash Flow $8,661.0M at 17.5% margin, Revenue growth 18.2%. Gross margin 39.7%, standout ROIC 91.6%, Total Debt to Equity 41.8%, 1Y Return 20.2%.
Key Catalysts
- Exceptional ROIC 91.6%
- Healthy revenue growth 18.2%
- Improving FCF margin 17.5%
- Platform scalability advantages
Risk Factors
- Regulatory risks in ride-sharing
- Moderate 1Y Return of 20.2%
- Competition in gig economy
Stock #10: Deutsche Bank AG (DB)
| Metric | Value |
|---|---|
| Market Cap | $155.1B |
| Quality Rating | 6.2 |
| Intrinsic Value | $23.9 |
| 1Y Return | 104.2% |
| Revenue | €53.8B |
| Free Cash Flow | €0.0 |
| Revenue Growth | (18.9%) |
| FCF margin | 0.0% |
| Gross margin | 56.5% |
| ROIC | 50.1% |
| Total Debt to Equity | 291.7% |
Investment Thesis
Deutsche Bank AG (DB) scores Quality rating 6.2 with intrinsic value $23.9 for international finance. Market Cap $155.1B, Revenue €53.8B, Free Cash Flow €0.0 at 0.0% margin, Revenue growth 18.9%. Gross margin 56.5%, ROIC 50.1%, Total Debt to Equity 291.7%, 1Y Return 104.2%.
Key Catalysts
- Strong 1Y Return 104.2%
- High ROIC 50.1%
- Solid gross margin 56.5%
- Restructuring momentum
Risk Factors
- Sharp revenue decline 18.9%
- Zero Free Cash Flow
- High debt-to-equity 291.7%
Portfolio Diversification Insights
This stock watchlist balances high-momentum tech leaders like TSM and MU (semiconductors, ~25% allocation) with healthcare (ABBV, 10%), e-commerce (BABA, 10%), and financials (HSBC, GS, C, SAN, DB ~40%, UBER 15%). Tech provides growth via high ROIC and revenue surges, banks offer yield potential despite FCF variability, and ABBV adds defensive margins. Cross-references show semiconductors complementing banks' stability, reducing sector risk while targeting undervalued stocks across regions (US, Asia, Europe). Overall, 40% tech/growth, 40% financials, 20% other enhances resilience.
Market Timing & Entry Strategies
Consider positions during sector dips, such as semiconductor pullbacks post-earnings or banking rallies on rate cuts. Monitor intrinsic value gaps widening >20% for entry, using Value Sense screeners for ROIC >15% and positive momentum. Dollar-cost average into high-quality names like TSM/MU over 3-6 months; watch financials (HSBC, SAN) for economic recovery signals. Pair with macroeconomic tools for timing investment opportunities in volatile periods.
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FAQ Section
How were these stocks selected?
These 10 best stock picks were chosen via Value Sense's criteria: high Quality ratings, intrinsic value upside, strong ROIC, and 1Y momentum, focusing on undervalued stocks with great momentum across sectors.
What's the best stock from this list?
MU leads with 348.5% 1Y Return, 45.4% revenue growth, and 8.2 Quality rating, though TSM excels in efficiency—selection depends on risk tolerance.
Should I buy all these stocks or diversify?
Diversification across tech, healthcare, and financials (as outlined) mitigates risks; allocate based on portfolio diversification insights rather than concentrating.
What are the biggest risks with these picks?
Key concerns include negative FCF in banks (C, GS), high debt (ABBV, financials), and cyclicality in tech—review risk factors per stock.
When is the best time to invest in these stocks?
Optimal during market corrections when intrinsic value discounts expand, aligned with market timing strategies like post-earnings dips or macro improvements.