High signal stocks #9 (Feb 8, 2026)

Hello and happy Sunday!

I added 36 holdings to the High Signal List this week (17 new ones). As a reminder, I added a sheet to the High Signal List with financials for all of the stocks. The High Signal List is linked for Premium subs in the HIGH SIGNAL STOCKS section of this email.

A little bit of underperformance this week due to the miners, a few software names, and some smid-cap electronics names.

However, we still remain solidly above the S&P since the inception of the High Signal List.

I believe I mentioned this before, but we got hit with a bit of unfortunate timing with the launch of the list.

I didn’t add the holdings from the Yellowbrick Elite funds until their Q4 letters came out, which means that a few of those funds’ holdings (particularly the handful of mining/metals funds) got added right at the top. So our High Signal List absorbed a bunch of drawdowns without getting any of the upside on the way up.

This will all work itself out over time.

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Below is a free overview for everyone. YB Premium subs get four more overviews, plus the link to the spreadsheet with all of the High Signal Stocks in the YB PREMIUM PITCHES section.

As a reminder, these are AI summaries. They include citations for the data, but should be double-checked. They are just meant to be quick overviews to help you determine if you want to dig in deeper.

Talen Energy (TLN) - Price: $345 | Market Cap: $15.76B | EV/EBITDA (NTM): 10.3x | Net Leverage: 4.1x

This stock has been pitched a few times on Yellowbrick recently (link) and is one of Alluvial Capital’s top holdings in their Q4 fund letter (link).

Talen Energy (TLN) is a strategic infrastructure compounder operating approx. 13.1 GW of power generation, including the 2.2 GW nuclear Susquehanna facility and a growing fleet of highly efficient gas assets in PJM. While the market currently prices TLN at 10.3x NTM EV/EBITDA, viewing it as a traditional merchant generator, our variant perception is that the stock is a mispriced digital infrastructure play where the "Flywheel" strategy of acquiring cash-flowing assets to fund buybacks and growth is accelerating faster than consensus estimates. This thesis is validated by the January 15, 2026 acquisition of 2.6 GW of generation (Lawrenceburg, Waterford, and Darby) for $3.45 billion, which management projects will yield immediate adjusted free cash flow per share accretion in excess of 15% annually through 2030. Why now: The convergence of data center demand and grid scarcity is crystallizing on the income statement, evidenced by the recent PJM auction clearing at $333.44 per megawatt-day for the 2027/2028 planning year, securing approx. $1.07 billion in capacity revenues. Furthermore, the January 2026 acquisition was secured at an attractive 6.6x 2027E Adjusted EBITDA, creating an immediate arbitrage against TLN’s current 10.3x trading multiple. We see a re-rating to 12.0x-14.0x as the market digests the >15% FCF accretion and the durable cash flows from the AWS data center campus ramp, implying +30-40% upside. Key risks include regulatory intervention on future interconnection or M&A activity and operational execution on the 85% unlevered free cash flow conversion targets; the thesis is disconfirmed if net leverage fails to return to the target of 3.5x or lower by year-end 2026 following the recent acquisitions.

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Thanks for reading!

Connor

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What are high signal stocks?

Yellowbrick tracks thousands of investors and collects 10,000+ stock pitches each year. The stock pitches from the best investors are put in the Elite Investor Feeds on Yellowbrick (link).

However, many stocks owned by great investors are never publicly pitched by those investors. This email (and the corresponding spreadsheet) tracks all stocks that I know are owned by good investors (whether that good investor has pitched them publicly or not).

YB ELITE INVESTOR PITCHES

YB PREMIUM SUBSCRIBERS ONLY

New stock pitches from Yellowbrick Elite Investors that were added to the website this week. Fewer than 5% of the 3,000+ investors we track qualify as an Elite Investor.

This section is locked for Yellowbrick Premium subscribers only. You can upgrade to Yellowbrick Premium here.

HIGH SIGNAL STOCKS

YB PREMIUM SUBSCRIBERS ONLY

AI overviews (with data citations) of new stocks added to the High Signal Stocks list.

This section is locked for Yellowbrick Premium subscribers only. You can upgrade to Yellowbrick Premium here.

YB PORTFOLIO UPDATES

YB PREMIUM SUBSCRIBERS ONLY

Updates to the Yellowbrick Tracking Portfolio, which holds 30-40 positions that are owned by Yellowbrick Elite Investors. Fewer than 5% of the 3,000+ investors we track qualify as an Elite Investor.

This section is locked for Yellowbrick Premium subscribers only. You can upgrade to Yellowbrick Premium here.

THAT’S ALL FOLKS

Thank you so much for reading today’s email!

If you ever have any feedback, suggestions, or questions, you can just reply to this email or email me at [email protected].

Connor

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