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 Viewpoint - The article highlights three stocks in the S&P 500 that have shown significant upward momentum after a period of underperformance, suggesting potential for continued growth in 2026 [1][2][12]. Group 1: Albemarle (ALB) - Albemarle's stock has increased by 39% over the past month, making it the best performer in the S&P 500 during this period [4]. - The company specializes in lithium extraction and refining, which is in high demand for electric vehicle batteries and large-scale power storage systems [4][7]. - Despite sluggish global EV sales, demand for Albemarle's lithium products is rising in other sectors such as battery storage and solar energy [7]. Group 2: Solventum (SOLV) - Solventum's stock has risen nearly 25% over the past month, positioning it as the second-best performer in the S&P 500 [8]. - The company, spun off from 3M in April 2024, produces a variety of medical products and has seen its stock surge following strong third-quarter earnings that exceeded forecasts [10]. - A $1 billion share repurchase program announced by Solventum has further boosted investor confidence in the company's growth potential [11]. Group 3: Merck (MRK) - Merck's stock has increased by nearly 22% over the past month, following a strong quarterly report that surpassed earnings and revenue expectations [12]. - The company's Keytruda cancer drug achieved quarterly sales exceeding $8 billion, marking a 10% increase from the previous year [12]. - Merck's management has successfully reduced costs, leading to an improved earnings outlook for 2025 [12].