The alpha Brief: Insights on Quant Investing and the alpha Brief Portfolio (aBP)

I maintain a Strong Buy rating at the current price. The operating thesis is stronger, but the original $728.29 entry has lost 46.6%, so the old timing call failed.

Willdan reported Q2 contract revenue of $231.0Mn, net revenue of $117.2Mn, adjusted EBITDA of $33.0Mn, and adjusted EPS of $2.07. Organic net revenue grew 18%, while the adjusted EBITDA margin reached a quarterly record of 28.2%.

A strong investment thesis should become stronger when new evidence arrives. This week, an AI-connectivity company translated product momentum into earnings leverage, a defense contractor expanded backlog visibility through a major missile award, and a gold miner combined lower costs with record profitability and aggressive buybacks. The common thread wasn't the share-price reaction. It was the growing body of evidence behind each long-term investment case.

Not all corporate announcements deserve the same weight. This week, one company extended a production platform, another converted proven technology into international demand, and a third introduced an ambitious AI architecture that still needs real-world deployment. The question isn't which story sounds biggest. It's how much proof already exists and how much still depends on execution.

This was a useful week because the most important developments did not all arrive with a rising share price. Yes price tells us how the market reacted over five sessions but the company development tells us whether the underlying thesis became stronger, weaker, or simply more complicated.

AI infrastructure is expanding beyond chips and data centers. RTX secured major multiyear missile contracts, AMD made an $8.2 billion bet on spatial intelligence, and NextEra advanced a $22 billion energy campus built around data-center demand. Together, these developments reveal a broader industrial investment cycle spanning defense, AI compute and power, highlighting how rising demand for technology, security and electricity is driving a new wave of long-term capital invest

Q2 revenue rose 24% to $3.27 Bn, adjusted operating margin expanded 410 basis points to 22.6%, and adjusted EPS increased 60% to $1.52.

Power generation, grid equipment and critical minerals are becoming increasingly interconnected. Reliable electricity cannot be delivered without generation capacity, transmission infrastructure and the raw materials required to build both.

I am downgrading Astec from a BUY to HOLD. Astec Industries reported Q2 2026 sales of $408.1Mn, up 23.6%, and adjusted EBITDA of $42.6Mn, up 26.0%. Adjusted EPS of $0.94 missed the $1.04 consensus estimate.

Our three stocks to watch this week capture different stages of the AI value chain. Vertiv addresses one of AI's increasingly important constraints which is power availability while Lam Research supplies the equipment needed to manufacture advanced semiconductors and Microsoft provides the cloud and software layer through which AI can ultimately be monetized.

I am downgrading RTX from STRONG BUY to HOLD. I like the company more after earnings, but I do not see enough valuation support to keep the old rating.The downgrade is not a verdict against the business. In fact, Q1 and Q2 strengthened almost every operating pillar in the original thesis. The problem is expected return.

Lockheed Martin's stock has largely lagged the broader defense sector in 2026, but the underlying business continues to strengthen. Record backlog levels, accelerating missile-defense demand, and raised full-year guidance suggest investor sentiment remains more pessimistic than the fundamentals warrant. With over $7 billion in projected free cash flow, I believe LMT remains an attractive long-term defense holding

Second-quarter revenue increased 92% y/y to $7.8 Bn, while adjusted EBITDA increased 191% to $3.5 Bn. The quarterly net loss narrowed from $1.0 Bn to $541 Mn. More importantly, growth is increasingly diversified across Connectivity, AI and Space.

The rising defense budgets and a recovering aerospace market continue to create attractive opportunities across the sector. In this article, I highlight three aerospace and defense stocks that offer exposure to different growth drivers: next generation military technology, critical industrial capabilities, and industry leading scale. Together, they provide a balanced way to capitalize on some of the strongest trends shaping aerospace and defense today.

I am rating ATI a Strong Buy because the company has successfully transformed itself from a cyclical materials producer into a highly specialized aerospace and defense supplier with record backlog, expanding margins, and growing pricing power. Its exposure to mission critical applications and long term customer relationships provides earnings durability that the market still appears to undervalue.

I rate Argan Inc a Strong Buy because I believe its EPC franchise sits at the center of the accelerating U.S. power infrastructure buildout driven by AI data centers, electrification, manufacturing reshoring, and aging generation replacement. This positioning provides exceptional backlog visibility, strong cash generation, and exposure to one of the most attractive long-term infrastructure themes in the market.

The company's long-term growth will be supported by three primary drivers: continued fiber infrastructure deployment across the United States, expanding exposure to hyperscale data center construction, and disciplined operational execution that is translating into higher margins and stronger cash generation. Management also continues investing in workforce development and strategic acquisitions to strengthen Dycom's competitive position.

I am rating Powell Industries a STRONG BUY because the market continues to value the company like a cyclical industrial business despite record backlog, durable gross margins, and significant exposure to long term electrification and data center infrastructure spending. I believe that these fundamentals support a higher quality earnings profile than investors currently recognize.

DXP Enterprises is a specialty distributor retooling its mix toward higher-margin services and AI-enabled inventory solutions. I see durable free cash flow upside and a valuation gap versus peers that makes DXPE a BUY.

I am rating Kratos a BUY because its key programs are positioned to benefit from the $156Bn defense funding package, with the company specifically citing hypersonics, Valkyrie CCA, solid rocket motors, drone engines, missiles and loitering munitions.