Howdy, folks.
I spend a lot of my life in hallways on Capitol Hill.
You fly in, you sit on a bench outside somebody's office, and you wait until they call you in.
I just boarded my 68th flight of the year, so I've gotten pretty good at waiting.
That waiting taught me the most useful thing I know about stocks that run on government money.
Washington moves them twice: once when the funding gets announced, and again when that money finally turns into orders. The stretch in between shakes out almost everybody.
It Sounded Like Star Wars
Andrew and I started talking about Kratos Defense (KTOS) back when it traded in the low 20s.
Kratos builds the Valkyrie, a loyal wingman (an unmanned jet that flies next to a piloted fighter and takes the dangerous jobs). A couple of years ago, that idea sounded like Star Wars to anybody outside my world.
Then the Pentagon put real money behind it. Between late 2025 and January 2026, the stock ran from about $27 to $134. Today it trades around $47, even though Kratos beat its second-quarter guidance and raised its full-year outlook.
When the U.S. and Iran signed an interim deal in June, investors sold Kratos even though the Valkyrie never flew in that war. Meanwhile, the Marines already picked it for a $231.5 million program with Northrop Grumman running the show.
Full disclosure: I run a drone startup myself, 22 employees now, so I see up close how slowly this money moves. Kratos just happens to be the cleanest example I know.
The government ran the competitions and wrote the checks, and now it's on the private company to get this over the finish line. When the purchase orders land, we get another bite of this apple. Nuclear sits in that same spot right now, just earlier in the cycle.
Diesel Won't Cut It
In August, the Army picked five companies to build nuclear microreactors (factory-built reactors small enough to haul on a truck) at Fort Bragg, Fort Campbell, Fort Hood, Fort Benning and Fort Drum. Up to $2.2 billion sits behind them. Army Secretary Dan Driscoll said the goal is power "without relying on potentially vulnerable external grids."
Right now, bases lean on diesel generators for backup, and there's real worry that fuel won't make it through in a national emergency. Frankly, it drives me nuts that this took so long. The Navy has run reactors on submarines since the 1950s.
This is bigger than people realize. So why do the stocks look like roadkill? Oklo (OKLO) traded near $194 last October and sat around $38 this week, and NuScale Power (SMR) has given back about 40 percent this year.
Read the contract. Companies get paid only after they hit specific technical goals, with money flowing from fiscal 2027 through 2031, and the Army wants its first reactor making power by September 30, 2028. The headline hit in August, and the checks come one test at a time.
You can watch the pattern play out week to week.
On September 16th, the House passed a bill making data centers pay for their own power, and the next day Oklo jumped 13% while NuScale climbed 10%. By Friday morning, both were handing it back, which is “buy the rumor and sell the news” in its purest form.
That wait mode is where Andrew and I do our best work in Capitol Gains.
I bring what I'm hearing in those hallways, and every Tuesday afternoon we turn it into a trade. Sometimes we buy the stock while nobody wants it, and sometimes we use options (contracts that let you bet on a move for a fraction of the stock's cost) while a sector sits in a downdraft.
I also wrote up the three companies I think Washington's nuclear push lifts, and why, in a new report called Washington Goes Nuclear.
Read more about how to get the report for yourself at this link
The funding headline already hit. I'd rather sit in position for the second move than chase it once the orders show up.
Talk soon,
Frank Gregory