Market Overview - February has started with a subdued market sentiment, characterized by an AI-driven sell-off in U.S. stocks as investors reassess high expectations [1] - Concerns have emerged regarding the potential erosion of pricing power for software stocks due to AI tools, alongside fears of a slowdown in hyperscaler AI capital expenditures impacting chip and data-center suppliers [1] - The market is seeking clearer monetization strategies and disciplined spending from companies [1] Investment Recommendations - Retail investors may find it challenging to identify stocks for solid long-term returns, but following broker recommendations can simplify this process [2] - Stocks such as Jacobs Solutions Inc. (J), Envista Holdings Corporation (NVST), and Tapestry, Inc. (TPR) are highlighted as potential investment opportunities [2] Broker Insights - Brokers develop informed views by engaging with senior management, analyzing public disclosures, and participating in earnings calls, which helps contextualize a company's fundamentals within the broader economic landscape [3] - Upgrades from brokers are often based on new evidence, such as updated guidance or channel checks, which can indicate an inflection point before it is reflected in market consensus [4] Stock Screening Strategy - A screening strategy is proposed to identify potential winning stocks, focusing on those with broker rating upgrades of 1% or more over the past four weeks [6] - Stocks must have a current price greater than $5 and an average 20-day trading volume exceeding 100,000 to ensure liquidity [6] Specific Stock Performances - Jacobs Solutions is expected to see a 16.5% year-over-year increase in fiscal 2026 earnings and has experienced a 6.3% upward revision in broker ratings recently [9] - Envista Holdings, with a diversified portfolio in dental solutions, is projected to have a 17.7% increase in earnings for 2026 and has seen an 18.5% upward revision in broker ratings [10] - Tapestry is anticipated to achieve a 19% year-over-year earnings growth in fiscal 2026, with a 5% increase in broker ratings [11]

Core Insights - Jacobs has been awarded a contract under the U.S. Missile Defense Agency's SHIELD program, with a ceiling value of $151 billion, focusing on scalable, software-enabled systems [1] - The contract aims to enhance the development and integration of advanced solutions across complex, mission-critical environments, emphasizing speed and agility in delivery [1] - Jacobs provides a wide range of services supporting national security infrastructure, including mission management, advanced data processing, cyber capabilities, artificial intelligence, and space engineering [1] Company Overview - Jacobs reported approximately $12 billion in annual revenue and employs nearly 43,000 people, offering end-to-end services across various sectors including advanced manufacturing, energy, and transportation [1] - The company is committed to creating a more connected and sustainable world through its diverse service offerings, which include advisory, planning, design, and lifecycle management [1]

Core Viewpoint - Growth stocks are appealing due to their potential for above-average financial growth, but identifying the right ones can be challenging due to associated risks and volatility [1] Group 1: Company Overview - Jacobs Solutions is currently recommended as a growth stock by the Zacks Growth Style Score system, which evaluates a company's growth prospects beyond traditional metrics [2] - The company holds a top Zacks Rank, indicating strong potential for performance [2] Group 2: Earnings Growth - Historical EPS growth for Jacobs Solutions is 0.2%, but projected EPS growth for this year is 16.5%, significantly higher than the industry average of 10.6% [5] Group 3: Asset Utilization - Jacobs Solutions has an asset utilization ratio (sales-to-total-assets ratio) of 1.09, outperforming the industry average of 0.85, indicating efficient asset use to generate sales [6] Group 4: Sales Growth - The company's sales are expected to grow by 9.4% this year, compared to the industry average of 4.2%, showcasing strong sales growth potential [7] Group 5: Earnings Estimate Revisions - There has been a positive trend in earnings estimate revisions for Jacobs Solutions, with the Zacks Consensus Estimate for the current year increasing by 0.9% over the past month [8] Group 6: Investment Positioning - Jacobs Solutions has achieved a Zacks Rank of 2 and a Growth Score of A, positioning it well for potential outperformance in the growth stock category [10]

Core Viewpoint - Investors are evaluating Jacobs Solutions (J) and Advanced Drainage Systems (WMS) to determine which stock offers better value for investment at the current time [1] Group 1: Zacks Rank and Earnings Outlook - Both Jacobs Solutions and Advanced Drainage Systems currently hold a Zacks Rank of 2 (Buy), indicating a positive earnings outlook due to favorable analyst estimate revisions [3] - The Zacks Rank is a reliable indicator for value investors as it emphasizes companies with improving earnings forecasts [2] Group 2: Valuation Metrics - Jacobs Solutions has a forward P/E ratio of 20.88, while Advanced Drainage Systems has a higher forward P/E of 29.09 [5] - The PEG ratio for Jacobs Solutions is 1.54, compared to Advanced Drainage Systems' PEG ratio of 2.26, indicating Jacobs Solutions may be undervalued relative to its expected earnings growth [5] - Jacobs Solutions has a P/B ratio of 5.07, while Advanced Drainage Systems has a P/B ratio of 7, further suggesting that Jacobs Solutions is a more attractive value option [6] Group 3: Value Grades - Based on the valuation metrics, Jacobs Solutions has earned a Value grade of B, whereas Advanced Drainage Systems has received a Value grade of D, indicating a stronger value proposition for Jacobs Solutions [6]

Industry Overview - The nuclear energy sector is experiencing significant capital deployment as nations shift towards carbon-free baseload power to meet rising electricity demand and enhance energy security [1] - The nuclear reactor construction market is projected to grow by $13.25 billion between 2026 and 2030, with a compound annual growth rate (CAGR) of 5.3% [2] Investment Opportunities - The Range Nuclear Renaissance Index ETF (NUKZ) serves as a primary vehicle for investors seeking exposure to the nuclear sector, focusing on infrastructure and service providers [3] - Key holdings in NUKZ, including Jacobs Engineering Group, Fluor Corporation, and Amentum Holdings, are well-positioned to benefit from the current spending cycle [3] Market Segments - The global nuclear decommissioning market is expected to reach $8.04 billion by 2026, growing at a CAGR of 6.49% through 2032, indicating diversified revenue streams for industry leaders [4] - Fluor and Jacobs have established long-term positions in high-margin decommissioning and waste management segments, while Amentum has a substantial backlog of $47 billion as of late 2025 [10] Performance Metrics - NUKZ has surged 42% over the past year as of February 4, and has continued to perform well in 2026, up 7.3% year to date compared to a 0.6% increase in the S&P 500 [5] - The investment case for nuclear energy is supported by long-cycle utility and sovereign commitments, with national energy security mandates acting as a catalyst for NUKZ [6] Geographic Insights - The U.K. market presents a significant opportunity, with government commitments to new gigawatt-scale projects like Sizewell C, estimated at $51 billion, benefiting companies like Jacobs and Amentum through recent contract awards [10]

Non-GAAP Financial Measures and Operating Metrics To supplement the financial results presented in accordance with generally accepted accounting principles in the United States ("GAAP"), we present certain non-GAAP financial measures within the meaning of Regulation G under the Securities Exchange Act of 1934, as amended. These measures are not, and should not be viewed as, substitutes for GAAP financial measures. More information about these non-GAAP financial measures and reconciliations of these non-GAAP ...

Core Insights - Jacobs Solutions Inc. has secured a significant contract to lead the engineering design of the Bolivar Roads Gate System, a major coastal storm surge barrier along the Texas Gulf Coast [1][9] - The project is part of the Coastal Texas Project, aimed at enhancing regional protection against hurricanes and flooding, and is expected to be one of the largest storm surge barrier systems globally [2][4] Project Overview - The Bolivar Roads Gate System will act as a protective barrier at the entrance between the Gulf of Mexico and Galveston Bay, safeguarding over six million residents and approximately $800 billion in infrastructure and property [4][5] - This initiative is described as a "generational investment" that aims to bolster coastal resilience and support uninterrupted commercial activity while incorporating advanced monitoring tools for long-term reliability [5][6] Strategic Importance - The Coastal Texas Project represents a collaboration between the Gulf Coast Protection District, the U.S. Army Corps of Engineers, and the Texas General Land Office, marking a significant effort in U.S. coastal resiliency history [6] - The project is backed by nearly $1 billion in initial state funding and is designed to limit storm surge while allowing maritime traffic to continue, thereby reducing storm-related damage costs and preserving coastal ecosystems [6] Financial Performance - Jacobs reported a record consolidated backlog of approximately $26.3 billion in the first quarter of fiscal 2026, reflecting a 21% year-over-year increase, driven by strong program wins across various sectors [7] - The company has secured notable project awards in key growth markets, including a $1.6 billion modernization project for Cleveland Hopkins International Airport, which supports its backlog growth and long-term revenue visibility [8] Market Reaction - Following the announcement of the contract, Jacobs' shares increased by 7.8% during the trading session, indicating positive market sentiment regarding the company's growth prospects [3][9]

Core Viewpoint - Jacobs has been selected to manage the construction of the San Dieguito Lagoon Double Track and Special Events Platform project, which aims to enhance rail capacity and reduce congestion along the LOSSAN Corridor, a vital rail link in Southern California [1][2]. Group 1: Project Details - The project involves 2.1 miles of track improvements, including a new double track to eliminate a bottleneck between Solana Beach and Del Mar fairgrounds, aimed at easing traffic congestion and improving access during large-scale events [2]. - Additional upgrades include the replacement of the century-old San Dieguito Lagoon bridge to improve climate resiliency, along with enhancements to turnouts, signals, communications, and drainage systems to boost operational efficiency [3]. Group 2: Company Overview - Jacobs is ranked No. 2 in Transportation by Engineering News-Record and is involved in moving people, goods, and freight through various modes of transport [4]. - The company generates approximately $12 billion in annual revenue and employs nearly 43,000 people, providing end-to-end services across multiple sectors including transportation, energy, and environmental services [5].

Core Viewpoint - The article emphasizes the investment philosophy focused on identifying mispriced securities through understanding the financial drivers of companies, often revealed by DCF model valuation [1]. Group 1: Investment Philosophy - The investment approach is centered on small cap companies across US, Canadian, and European markets [1]. - The methodology is flexible, not confined to traditional value, dividend, or growth investing, but considers all prospects of a stock to assess risk-to-reward [1].

Group 1: Company Performance - Jacobs reported a profit of $125.51 million for its fiscal first quarter 2026, compared to a loss of $18.13 million during the same period last year [9] - Revenue for the quarter reached $3.29 billion, reflecting a 12.3% increase from $2.93 billion a year ago [9] Group 2: Industry Trends - Construction demand for AI-related facilities is expected to continue growing, with a significant pipeline of work anticipated over the next 12 to 18 months across various markets, including the Middle East and Europe [2] - Pipeline growth in major verticals, such as life sciences and advanced manufacturing, increased by approximately 25%, while critical infrastructure work surged by more than 50% [2] Group 3: AI Integration - The company has doubled its AI efforts in development and consultancy, focusing on automating tasks and enhancing predictive analytics on-site [4] - The use of predictive analytics platforms like Acuity has been transformative, allowing the company to proactively address field-level issues in real time [5] Group 4: Project Focus - Key projects remain centered around data centers and semiconductor facilities, with owners often purchasing large electrical equipment directly while contracting Jacobs for integration [7] - There is also strong demand in the water sector, both domestically and internationally, with consistent gains in water-related construction bookings [8]