When the Mega Caps Wobble, This Hardware Builder Has the Numbers
The biggest tech stocks are losing some of their grip, but the market underneath them is getting stronger.
This week’s list moves down the market-cap ladder to companies with real earnings growth, larger backlogs, and catalysts the megacaps do not own.
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Celestica (CLS)
Catalyst: Revenue jumped 62%, guidance moved sharply higher, and the stock sold off anyway
Celestica delivered one of the strongest quarters in the market. Revenue climbed 62% to $4.70 billion, adjusted earnings reached $2.54 per share, and operating margin improved to a company record.
Management also raised nearly every important full-year target. The 2026 revenue outlook increased from $19.0 billion to $20.5 billion, adjusted EPS rose from $10.15 to $11.30, and free-cash-flow guidance moved from $500 million to $600 million.
The bigger signal came from 2027. Celestica now expects revenue growth to accelerate beyond the 65% pace projected for 2026, supported by stronger customer forecasts and new program wins.
The stock still fell after the report. That does not weaken the business case. It shows how much growth investors had already priced in. Celestica is now being judged against exceptional expectations, not ordinary ones.
This remains one of the cleaner ways to own AI infrastructure without buying another trillion-dollar chip company. Celestica builds servers, storage systems, networking equipment, and other hardware that lets data centers turn semiconductor spending into working infrastructure.
What to watch: Data-center demand, operating margins, free cash flow, and the company’s 2027 growth outlook. Buy in stages on weakness. The risk is valuation, not a lack of demand.
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Comfort Systems USA (FIX)
Catalyst: Data-center construction pushed revenue up 50% and backlog to a new record
Comfort Systems USA is the less obvious infrastructure winner hiding behind the AI buildout. The company installs the electrical systems, cooling equipment, and mechanical infrastructure that large data centers need before the servers ever turn on.
Second-quarter revenue surged 50% to $3.27 billion. Earnings nearly doubled to $12.53 per share, while quarterly operating cash flow exceeded $1.1 billion.
Backlog tells the stronger story. Comfort ended June with $14.06 billion of contracted work, up from $8.12 billion a year earlier. That gives the company unusually strong visibility through the rest of 2026 and into 2027.
The stock has already had a massive run, and the valuation reflects it. That makes entry price important. But the underlying thesis remains intact: data centers need power and cooling before they need another software subscription.
Comfort Systems is not a hidden bargain. It is a high-quality compounder in a market willing to pay for scarce execution. The recent pullback deserves attention because the business is growing faster than most of the companies receiving more headlines.
What to watch: Backlog conversion, data-center demand, labor availability, and operating cash flow. Buy sharp pullbacks, but do not chase the stock after vertical rallies.
Garmin (GRMN)
Catalyst: Record results, stronger margins, and growth well beyond smartwatches
Garmin reminded investors that consumer technology does not begin and end with phones. Second-quarter revenue rose 11% to a record $2.02 billion, while operating income jumped 30% to $616 million.
Margins were the standout. Gross margin expanded to 62.4%, operating margin reached 30.4%, and adjusted earnings increased 29% to $2.81 per share.
Fitness revenue grew 25%, supported by strong demand for advanced wearables. Marine sales increased 14%, aviation grew 8%, and the automotive business returned to profitability. That diversification is the reason Garmin keeps outlasting every prediction that smartphones will make it irrelevant.
Management raised full-year revenue guidance to approximately $8.05 billion and lifted adjusted EPS expectations from $9.35 to $10.00. The stock jumped more than 16% after the report, taking the company above a $50 billion market value for the first time.
Garmin is the cleanest non-AI growth name on this list. It has strong margins, a cash-rich balance sheet, and loyal customers across fitness, aviation, marine, and outdoor markets.
What to watch: Fitness growth, product launches, margin sustainability, and any slowdown in outdoor sales. Do not chase the earnings spike. Buy after the stock builds a better base.
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Wabtec (WAB)
Catalyst: Rail demand, a $31 billion backlog, and another guidance increase
Wabtec is not a stock that dominates social media. It is a rail-equipment business quietly producing the numbers investors say they want.
Second-quarter sales rose 17.5% to $3.18 billion, adjusted EPS increased 21.6% to $2.76, and adjusted operating margin expanded to 21.9%. Freight and transit both delivered double-digit growth.
The backlog reached $30.93 billion, up nearly 42% from a year earlier. That gives Wabtec long-term visibility across locomotives, rail components, digital systems, maintenance, and transit equipment.
Management raised 2026 revenue guidance to between $12.3 billion and $12.6 billion. It also lifted adjusted EPS guidance to $10.60 to $10.90, which represents roughly 20% growth at the midpoint.
This is the steady industrial compounder of the group. Railroads and transit systems need replacement equipment, modernization, safety technology, and more efficient locomotives. Those investments move slowly, but they also create durable revenue once contracts are signed.
The stock trades at a premium, so the argument is not that Wabtec is cheap. The argument is that earnings visibility and margin expansion justify keeping it high on the screen.
What to watch: Backlog growth, locomotive deliveries, transit margins, acquisition integration, and cash conversion. Buy pullbacks while guidance and backlog continue moving higher.
BWX Technologies (BWXT)
Catalyst: Nuclear and defense demand ahead of an August 3 earnings report
BWX Technologies gives the list its smallest company and its clearest near-term event. The company reports second-quarter results after the market closes on Monday, August 3.
BWXT builds nuclear components and fuel for submarines, aircraft carriers, government programs, commercial reactors, and emerging small-reactor projects. That puts the company at the intersection of defense spending, energy security, and the renewed nuclear buildout.
The first quarter set a high bar. Revenue rose 26% to $860.2 million, adjusted EPS reached $1.12, and management raised its full-year profit and cash-flow forecasts. Backlog had climbed to $8.7 billion, compared with $4.9 billion a year earlier.
The company has also completed its acquisition of Precision Components Group, expanding its U.S. commercial nuclear manufacturing capacity. That gives BWXT another route into the broader nuclear revival beyond its established defense work.
The business deserves attention, but the stock already carries a premium valuation. Earnings need to show that backlog is turning into revenue without creating margin or execution problems.
What to watch: Monday’s earnings, backlog, commercial nuclear orders, defense margins, and updated guidance. Hold existing positions through the report only if you accept the volatility. New buyers should wait for the numbers.
Poll: What are you most focused on in your portfolio heading into August?
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Final Word
This week’s list shows why moving down the market-cap ladder does not mean moving down in quality.
Celestica is producing extraordinary growth from data-center hardware. Comfort Systems is installing the power and cooling behind that buildout. Garmin has record margins and a consumer franchise broader than most investors realize. Wabtec has a nearly $31 billion backlog. BWX Technologies offers direct exposure to nuclear and defense demand.
These companies are not undiscovered. Their results are too strong for that. But they receive far less attention than the market’s usual megacap leaders.
The takeaway is simple: look beyond the companies buying the infrastructure. Some of the better setups belong to the businesses building, connecting, cooling, and powering it.
That’s all for today. Thank you for reading. If you have any feedback, please reply to this email.
Best Regards,
— Adam Garcia
Elite Trade Club
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