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This Month's Exclusive Story
The Market Is Selling Everything, but These 5 Stocks Aren't Breaking DownWritten by Bridget Bennett. Publication Date: 4/10/2026. 
Key Points
- Cloudflare, Datadog, and Palo Alto Networks are all outperforming a software sector weighed down by AI replacement fears, signaling competitive advantages the market hasn't fully priced in.
- Thermo Fisher Scientific is leveraging operational efficiency to convert modest sales growth into stronger earnings growth, making it a defensive pick trading at a multi-year discount.
- AT&T's nearly 4% dividend yield and 8.5% expected earnings growth give investors a recession-resistant way to stay in the market while collecting income.
- Special Report: Elon Musk’s $1 Quadrillion AI IPO
The conflict in Iran has given investors a reason to sell almost everything. The Dow is in correction territory. Oil prices have surged. Entire sectors are trading as if a recession has already arrived. But inside those beaten-down groups, a handful of stocks are quietly doing something different. Joseph Hogue, CFA and host of the Let's Talk Money YouTube channel, says that divergence is worth watching. Landmark research from UCLA shows that stocks outperforming their peers over a three- to 12-month window tend to continue outperforming over the next three to 12 months — and the reverse is also true. So instead of chasing discounts on broken names, Hogue focuses on the companies showing relative strength inside the weakest corners of the market. Cloudflare: Edge Computing's Quiet Winner
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Software stocks have been punished by the narrative that AI will replace traditional software companies. The software industry is down almost 15% over the past year, yet Cloudflare (NYSE:NET) is bucking the trend — up nearly 70% over the past year. What's driving the divergence? Cloudflare's content delivery network sits in front of roughly 20% of the global internet, giving the company a large cross-selling runway for security tools, performance products, and developer services. It has also moved aggressively into edge computing, positioning its global server footprint as a natural home for AI inference workloads that need to run close to end users. Revenue grew nearly 34% year over year in Q4 2025 to $614.5 million, beating estimates. The company still operates at a slight GAAP loss, but free cash flow margin reached 16.2% in the most recent quarter — a sign the business model is scaling. Datadog Could Be the Next Platform StoryAlso outperforming the struggling software space is Datadog (NASDAQ:DDOG), up almost 15% for the year while peers have sunk. Hogue sees it as a potential platform play on the scale of Palantir (NASDAQ: PLTR), and the comparison starts with data. Datadog's observability and security platform helps enterprises monitor everything from cloud infrastructure to application performance. Q4 2025 revenue hit $953 million, up 29% year over year, and the company now counts 603 customers paying more than $1 million in annual recurring revenue. For 2026, management guided revenue to $4.06 billion–$4.10 billion. After modest near-term revenue growth while the company invests heavily in R&D and AI capabilities — including a recent partnership with Sakana AI — consensus estimates call for roughly 21% earnings growth the following year as operational leverage kicks in. Palo Alto Networks: Cybersecurity's Pricing OpportunityThe fear that AI would erode cybersecurity companies has hammered the sector. Hogue argues the opposite: AI is expanding the attack surface, and enterprises are spending more, not less, to defend against it. Palo Alto Networks (NASDAQ:PANW) is the largest pure-play cybersecurity company, and its stock has held up much better than peers — up slightly over the past month while the broader cybersecurity group has sold off. The numbers back that resilience. Fiscal Q2 2026 revenue grew 15% year over year to $2.6 billion, with non-GAAP operating margins expanding to 30.3%. That level of profitability is rare in cybersecurity, where many competitors are still burning cash on customer acquisition. Palo Alto leads in some of the fastest-growing segments: cloud security, SASE, and the emerging agentic AI security category. Recent acquisitions — including CyberArk and Chronosphere — broaden the platform further. On valuation, Hogue notes the stock is trading at one of its cheapest price-to-sales levels in five years. Thermo Fisher: Operational Leverage in a Defensive WrapperFor investors who want market exposure but also peace of mind, Hogue pivots to healthcare. The healthcare equipment industry is down 6% over the past month and 13% over the year. Thermo Fisher Scientific (NYSE:TMO) is only down about 2% over the same month, outperforming the group. At roughly $185 billion in market cap and $44.6 billion in annual revenue, Thermo Fisher is a giant in life-sciences instruments and diagnostics. The operational story is what separates it: management's 2026 guidance implies approximately 5.2% revenue growth translating into 7.3% earnings growth, indicating discipline on costs. Adjusted earnings per share (EPS) are expected to be near $24.50 this year. On a price-to-sales basis, the stock trades at about 4X, a discount to its five-year average of 5.2X. That kind of discount on a market leader with improving earnings leverage doesn't happen often. AT&T: Getting Paid to WaitThe final name on the list sticks with the safety theme. Few consumers cancel cell plans in a downturn, which makes AT&T (NYSE:T) a dependable place to park capital while the macro picture sorts itself out. The telecom sector is down about 3% over the past month; until a recent dip, AT&T had been up about 1%. AT&T's dividend yield is roughly 4%, and the payout ratio sits around 36%, meaning the dividend is well covered by earnings. AT&T delivered nearly 9% adjusted EPS growth last year to $2.12, and the company is guiding for more than $18 billion in free cash flow for 2026. Hogue highlights that AT&T is leveraging modest 2.3% revenue growth into roughly 8.5% earnings growth — a four-to-one ratio that suggests tighter operations even if the top line isn't explosive. In an oligopoly shared with Verizon and T-Mobile, there's no existential competitive threat. The stock isn't going to make anyone rich overnight, but 8% earnings growth plus a 4% dividend yield can be a compelling total-return combination in a market where safety is scarce. The Thread: Relative Strength With Real FundamentalsThese five names span different sectors and risk profiles, but the logic connecting them is the same: each is outperforming a weak peer group, and each has fundamentals that help explain why. In a market driven by fear and headline risk, that combination of relative strength and earnings quality is where momentum investors often find their best entries. |
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