The Insider Report: Bulls Gasp for Air Following Tariff Ruling

Market Overview It was another wild week for stocks, which finished higher along with some notable leadership shifts. The Nasdaq finally outperformed, which is an encouraging sign, as it closed up 1.54% on the week. The S&P 500 and Dow Jones Industrial Average followed, closing up 1.07% and 0.25%, respectively. The Supreme Court ruled against the legality of tariffs after a lower-than-expected GDP report and a higher-than-expected inflation report. The conflicting signals continue as we head into the final week of February which is historically favorable to the bulls. There are some encouraging signs on the capital flow front compared to prior weeks, however. Stocks I Like Fluence Energy (NASDAQ:FLNC) – 90% Return Potential What's Happening Fluence Energy, Inc. (FLNC) is a leading global provider of energy storage solutions, delivering grid-scale battery systems, AI-enabled digital applications, and optimization services for renewables and power grids, offering investors exposure to the rapidly growing clean energy storage and sustainable infrastructure sector with a focus on innovative technology for decarbonization and energy resilience. For real-time stock price and performance details, refer to the finance card above. The last quarter showed revenue of $475.23 million but a loss of $37.74 million. The valuation in FLNC is mixed. Price-to-Sales is a solid 0.94 but Book Value is just 2.94. From a technical perspective, FLNC is retesting a key support zone. If it holds here and forms a higher-low, it would serve to reinforce the longer-term uptrend. Why It's Happening Fluence Energy Inc. is riding the wave of surging demand for energy storage solutions, with a record $5.5 billion backlog fully covering the midpoint of its reaffirmed $3.2-3.6 billion revenue guidance for fiscal 2026. This robust visibility stems from increased U.S. contracting and legislative impacts, positioning the company to capitalize on the global shift toward renewable integration and grid stability amid rising energy needs. Expansion into AI and data center infrastructure enhances Fluence Energy’s growth narrative, as its utility-scale storage platforms address the power demands of hyperscalers and long-duration projects. With a pipeline surging by $7 billion or 30% primarily from the U.S., the company is tapping into emerging opportunities in high-growth sectors like data centers, creating diversified revenue streams beyond traditional renewables. Strong order intake momentum underscores Fluence Energy’s operational resilience, with $750 million in new global orders during Q3 2025, over $500 million from the U.S. alone. This reflects a clear recovery in domestic demand, enabling the company to scale its software-enabled storage systems and meet escalating requirements for reliable, efficient energy management in a transitioning power landscape. Global leadership in energy storage provides Fluence Energy with a competitive edge, as its innovative platforms support the broader adoption of renewables and electrification. The company’s focus on utility-scale projects aligns with worldwide trends toward sustainable energy, fostering long-term partnerships and positioning it as an essential enabler in the multi-trillion-dollar clean energy transition. Path to enhanced profitability through scale bolsters Fluence Energy’s story of maturation, with ongoing improvements in volume recovery and backlog execution set to drive margin expansion. As the company navigates from losses toward consistent earnings, its fortified position in high-demand markets like solar and AI infrastructure offers a foundation for sustainable value creation in 2026 and beyond. FLNC is a candidate for a short squeeze with roughly 32% of the floated shares being sold short. Analyst Ratings:Jeffries: BuyGoldman Sachs: Buy Barclays: Equal-Weight My Action Plan (90% Return Potential) I am bullish on FLNC above $15.00-$15.50. My upside target is $34.00-$35.00. Ultra Clean Holdings (NASDAQ:UCTT) – 36% Return Potential What's Happening Ultra Clean Holdings, Inc. (UCTT) is a leading provider of critical subsystems, components, and services for the semiconductor and display capital equipment industries, specializing in gas delivery systems, fluid delivery, precision robotics, and ultra-high purity cleaning, offering investors exposure to the rapidly growing semiconductor manufacturing and advanced technology sector with a focus on innovation, supply chain efficiency, and enabling next-generation chip production. The previous quarterly report showed revenue of $510 million and earnings of $12.9 million. Valuation is also mixed in UCTT. Price-to-Sales is at 1.19 but Book Value is just 15.60. At a technical level, UCTT looks to be consolidating into the flag portion of a bull flag pattern. These are some of the most powerful patterns in all of technical analysis and points to an eventual resolution to the upside. Why It's Happening Ultra Clean Holdings Inc. is benefiting from the surging demand in the semiconductor industry, driven by AI-enabled high-performance computing and advanced chip manufacturing needs. As a key supplier of critical subsystems for wafer fabrication equipment, the company’s products are essential for supporting the expansion of digital infrastructure, creating a resilient growth story amid the ongoing AI boom and data center proliferation. Recovery in chipmaker production cycles positions Ultra Clean for a strong rebound in 2026, as inventories normalize and semiconductor spending ramps to meet escalating AI and computing demands. This cyclical upturn aligns with the company’s role as a foundational enabler in the semiconductor ecosystem, promising enhanced revenue from increased manufacturing activity worldwide. Global expansion and new facility contributions enhance Ultra Clean’s operational scale and revenue diversification. Investments in sites like the Czech facility are set to drive incremental growth starting in late 2025, tapping into broader demand for advanced process subsystems and supporting long-term partnerships with major equipment manufacturers in emerging fab buildouts. Path to sustained earnings growth underscores Ultra Clean’s maturing business model, with projections for robust revenue and EPS expansion through 2026 and beyond. The company’s focus on high-margin, reliable solutions for complex chip production addresses persistent supply chain needs, fostering a narrative of consistent value creation in a high-demand sector. Exposure to structural trends in electrification and digital transformation bolsters Ultra Clean’s long-term prospects. As semiconductor requirements evolve for AI, automotive, and industrial applications, the company’s expertise in cost-effective, high-reliability components ensures it remains integral to the industry’s innovation cycle, driving enduring growth opportunities. Analyst Ratings:Needham: Buy Oppenheimer: Outperform My Action Plan (36% Return Potential) I am bullish on UCTT above $45.00-$46.00. My upside target is $80.00-$82.00. Darling Ingredients (NYSE:DAR) – 50% Return Potential What's Happening Darling Ingredients Inc. (DAR) is a leading global developer and producer of sustainable natural ingredients from edible and inedible bio-nutrients, transforming animal by-products, bakery residuals, and used cooking oil into specialty ingredients for food, feed, fuel, and bioenergy applications, offering investors exposure to the rapidly growing sustainable ingredients and circular economy sector with a focus on innovation, environmental responsibility, and resource efficiency. The company's last quarterly report showed revenue of $1.71 billion and earnings of $119.77 million. Valuation in DAR is steep. P/E is a whopping 130.67, but Price-to-Sales is a more reasonable 1.33. EV to EBITDA is at 15.55. From a charting point of view, DAR is bullish as long as it keeps trading within the ascending price channel. Why It's Happening Darling Ingredients Inc. is leading the circular economy by transforming animal by-products and food waste into sustainable ingredients for food, feed, fuel, and industrial applications, capitalizing on global demand for eco-friendly solutions amid regulatory pressures for waste reduction and renewable energy. Robust revenue and earnings trajectory underscores Darling Ingredients’ operational strength, with noteworthy 3-month revenue growth as of September 2025 reflecting resilient demand for its diversified products, setting a foundation for continued financial improvement into 2026. Long-term growth potential positions Darling Ingredients for sustained expansion, supported by improving financial performance and a focus on high-margin sustainable innovations that align with consumer trends toward clean ingredients and biofuels. Mispriced opportunity amid temporary challenges makes Darling Ingredients an attractive value play, due to cyclical margin compression and headwinds, yet it's poised for more upside as market conditions normalize and its core business fundamentals shine. Analyst Ratings:Piper Sandler: OverweightJeffries: Buy TD Cowen: Hold My Action Plan (50% Return Potential) I am bullish on DAR above $43.00-$44.00. My upside target is $75.00-$80.00. Market-Moving Catalysts for the Week Ahead Thinking Across Multiple Timeframes Over the past few weeks, I've highlighted some of the bearish capital flows in the market. Stocks have been chopping around for a few months now, save for the Dow, which hit a new all-time high just a couple weeks ago. However, these bearish observations are very much short-term oriented. Long-term and intermediate-term, stocks remain in a solid bull market. If anything, we're setting up for the biggest and best buying opportunity of 2026. It's important to understand that short-term downtrends can exist within long-term uptrends, and to not lose sight of the bigger picture. We remain in an environment where taking risks on the long side may be punished, but I don't expect this to last much longer. Beware of the Second-Half of February From a seasonal perspective, the second half of February has historically exhibited bearish tendencies for stocks, as early-month gains often fade into consolidation, pullbacks, or increased volatility. Data shows that while the market tends to rally in the first half of the month, performance weakens after mid-February, with the S&P 500 and Nasdaq experiencing mediocre or slightly negative average returns, exacerbated by post-earnings adjustments and a structural shift toward selling pressure extending into early March. In fact, this is the ideal time band that I'd be looking for the market to bottom. But first, I would prefer to see a broad-based liquidation even in the defensive sectors like utilities and consumer staples – nothing can be spared before we bottom. Sector & Industry Strength Market internals keep deteriorating for the bulls. While the industrials sector showed some signs of life last week, there are still issues given how energy has led the pack since the fourth quarter, a classic late-cycle strong performer. The four sectors lagging the most are all tied to growth themes, signaling real trouble ahead. Consumer discretionary (XLY) and financials (XLF) are locked in a tight race for the poorest returns since Q4 began, with communications (XLC) and technology (XLK) not lagging far behind. Remember, a true market bottom will require these growth-oriented sectors to stage a rebound. As long as defensive areas like energy (XLE), consumer staples (XLP), and healthcare (XLV) are the major leaders, broader challenges will persist. 1 week3 Weeks13 Weeks26 WeeksCommunicationsEnergyBasic MaterialsEnergy Editor's Note: Bulls gasp for air with communications coming back into the picture. Chips Shrugging Off Risks (Sector ETF: SMH/QQQ) It's time to have another look at the most important ratio of this bull market in stocks. There's already a narrative forming around the inherent risks showing up in the tape, and it has everything to do with AI. I like to use the ratio between semiconductors (SMH) and the Nasdaq 100 (QQQ) as a proxy to measure the health of the AI theme. The idea is that SMH, or chips, should outperform the broader tech space since AI needs new and improved chip capacity to operate. Ever since this ratio broke out from the wedge pattern in November, it hasn't looked back. The broader indices are going to struggle to face a meaningful correction as long as this continues to climb. Even if we get a pullback, it would be considered a dip-buying opportunity as long as this ratio keeps its uptrend. A Blip in the Bullish Radar (Sector ETF: XLP/XLK) Given the recent choppiness of markets, and the leadership from defensive sectors, it's a good time to compare arguably the most defensive sector of the market, consumer staples (XLP) against the most growth-oriented sector of the market, technology (XLK). It's not a surprise to see this ratio in a downtrend for the past couple of years. After all, stocks have been in a bull market, and when that's the case, you're almost always going to see XLK outperform XLP. But since late-October, staples (XLP) have actually outperformed technology (XLK). Bigger picture, nothing has changed in terms of the trend. I'm looking for a lower-high here soon and for the tech sector to return to its former glory. Quite often, by the time the staples sector is showing attractive setups, the market is not far from bottoming. Junk Holding Strong (Sector ETF: HYG/IEI) Despite the near-term volatility in stocks, there's been remarkable resiliency when it comes to liquidity from the bond market. This week, I'm looking at the ratio between junk bonds (HYG) 3-7 Year Treasuries (IEI). This ratio has been coiling into a massive saucer formation for years. Saucers are momentum patterns, and it's only a matter of time before the Fed cuts rates again this year. This should turn into jet fuel for this ratio to rip higher. In such a scenario, I'd look for stocks to soar to the upside too. If this ratio keeps it up, look for pullbacks to be rather muted and drawn out as well – not all that different from what the market has experienced in the past few months. Cryptocurrency Returning to Ethereum this week amid the ongoing turmoil in the cryptocurrency market. The notorious four-year cycle continues to play out in real time, with Ethereum retreating to price levels last observed in May 2025. In the past week, Ethereum continued to consolidate its losses after breaking key support between 2100-2200. Downward pressure is likely to continue as long as it remains under that threshold, and it’s poised for further downside. There's another support zone in 1650-1750 area, which it briefly touched recently. This level represents a critical test: if Ethereum holds firm here, it may establish the basis for a major bottom, potentially offering one of the most attractive buying opportunities in recent years. However, a final washout to 1350-1400 would actually be preferred, as it would likely lead to a true capitulation. Legal Disclosures: This communication is provided for information purposes only. This communication has been prepared based upon information, including market prices, data and other information, from sources believed to be reliable, but Benzinga does not warrant its completeness or accuracy except with respect to any disclosures relative to Benzinga and/or its affiliates and an analyst’s involvement with any company (or security, other financial product or other asset class) that may be the subject of this communication. Any opinions and estimates constitute our judgment as of the date of this material and are subject to change without notice. Past performance is not indicative of future results. This communication is not intended as an offer or solicitation for the purchase or sale of any financial instrument. 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