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Tom Young is here with your Sunday digest.
“Everyone knows” may be one of the most dangerous terms in investing:
- “Everyone knows that Internet stocks don’t need profits.”…
- “Everyone knows that real estate prices are only rising.”…
- “Everyone knows that Bitcoin will reach $1 million.”
This is because “everyone knows” means that every investor collectively believes the same thing. Once that happens, there will be no one left on the other side of the deal.
And there is the problem. If there are only buyers and no sellers, you will end up with speculative bubbles ranging from Las Vegas real estate to coins that can end in disaster.
There is now a new “everybody knows” phenomenon sweeping the markets: that the US Federal Reserve is going to do it no Cut interest rates in 2026. In fact, The Wall Street Journal I reported last week that regional bank chiefs were starting to talk about the possibilities Walking tour Rates.
This has pushed investors into companies that perform well when interest rates are high, namely cash-rich giants such as Apple Inc. (Apple) and Alphabet Company (Google). These giants can finance their growth without worrying about borrowing cash. In fact, Magnificent Seven shares now make up roughly 35% of the overall S&P 500, up from about 20% in early 2023.
But what about the other side of that trade – those who are betting that lower interest rates may still be on the table?
InvestorPlace Senior Analyst Louis Navellier He is one of them.
He rightly feels that the US jobs and consumption markets are weaker than Wall Street believes. The Fed may be forced to cut interest rates even as gasoline-led inflation continues.
To capitalize on this trend, Lewis has identified 53 small-cap stocks that he calls his own “exclusion list” – Companies that are simply too small for major Wall Street firms to aggressively purchase.
These are mostly high growth companies needs Cheap money to finance further expansion… and he shares this list for free with people who Register for his presentation on May 13. During the show, Lewis will highlight the stocks he believes have the highest condemnation on that list.
To give you an idea of these 53 companies, I’ve chosen three to share with you today.
Let’s dive in…
Small Stocks to Buy #1: Watts Rising
Rising global energy prices have put solar energy back on the menu.
Solar farms are being built quickly, are unaffected by rising fossil fuel prices, and still benefit from federal programs like the IRA that are set to expire for many more years. In fact, the U.S. Energy Information Administration expects solar energy to make up 51% of all new electricity generation capacity in 2026, led by states like Texas and Arizona.
Many of the “big boys” in solar have already seen their stock prices rise. Hanwha Solutions Corp, a South Korean giant with a major solar division, has seen its shares rise 420% since 2025.
But the rush toward huge solar manufacturers has left smaller companies by the wayside. This brings us to our first compact filter:
Toyo Co., Ltd. (Toyo).
TOYO is a vertically integrated solar manufacturer headquartered in Tokyo and listed on the Nasdaq. The company produces next-generation TOPCon (tunnel oxide passivated contact) cells, which provide higher solar energy conversion rates than the older PERC standard that dominates installed capacity.
The company recently became the largest non-FEOC (Foreign Entity of Concern) TOPCon cell maker after opening a 4 GW cell plant in Ethiopia and acquiring a 1 GW facility in Houston last year, which they plan to double in size. This designation is important because projects claiming IRA manufacturing tax credits must prove that their supply chains are free of FEOC content. This gives TOYO a huge advantage over Chinese competitors such as JinkoSolar Holding Co. Ltd. (jx).
This has helped TOYO reach a growth inflection point. Revenue is expected to rise 95% to $832 million this year, then rise another 33% in 2027 as U.S. manufacturing expands. Earnings should rise faster as the company reaches size.
Best of all, stocks are remarkably cheap — even more so if interest rates fall. The stock is trading at less than 5 times forward earnings, which shows how many small companies are being mispriced simply because Wall Street doesn’t know they exist.
Naturally, investors should be aware of the risks involved with small-cap stocks, especially with a closely held company like Toyo. The holding company structure is opaque and its balance sheet includes financing from related party sellers which to me looks like a house of cards. It’s a bit like Tesla Inc. (TSLA) in 2008 or 2017, as the company makes a huge financial leap with no guarantee of landing on solid ground… all while “embellishing” its financial reports to appease investors. Inventory He could It goes to zero, especially if interest rates rise and funding evaporates.
However, if TOYO’s bets pay off, the stock would be worth multiples of what it is today. According to the Lewis system, this is a bet that could pay off.
Small-Cap Stocks to Buy #2: Floating Along
The closure of the Strait of Hormuz has been a disaster for global oil logistics. There are nearly 1,600 ships stuck in the Persian Gulf, including at least 50 massive aircraft carriers and hundreds of small oil tankers.
Reopening the strait will not bring life back to normal for months. Shipping companies will be reluctant to send new ships through the choke point – for fear of hitting sea mines or trapping more of their fleet if firing resumes. Moreover, the damage to oil terminals in the Gulf is so extensive that it could take until 2027 to get production back up to speed.
However, this has proven to be a huge asset to shipping companies. They saw charter prices rise as the remaining ships were forced to make longer voyages. Each additional day at sea exacerbates the shortage because ships are not available for new charters.
This should benefit one of Lewis’ small tankers on the 53-stock exclusion list:
Ardmore Shipping Company (ASC).
Ardmore is a Bermuda-based shipping company specializing in the transportation of refined petroleum products. The company owns 25 vessels (plus one charter vessel) and has a long history of positive cash flows. They have generated cash in 13 of the last 15 years.
The recent rise in shipping rates will now create a windfall for Ardmore. Analysts expect net income to rise 25% on average over the next two years, and that number could be higher if shipping rates remain high. Below is a chart of the Baltic Clean Oil Tanker Index – most relevant to the Ardmore fleet. As you can see, rental prices have increased 3X since last year.
Index of clean oil tankers in the Baltic region
Source: L/S/E/G
Ardmore is also expected to benefit financially from lower US interest rates. Twenty of the company’s ships are mortgaged based on the Treasury’s Secured Overnight Financing Rate (SOFR), so lower rates immediately mean lower interest payments. It will also reduce the cost of purchasing new ships.
Fortunately, Wall Street hasn’t caught up yet.
The shipping company’s shares trade at just 12.5X forward earnings and 9.3X forward cash flow – a striking distance from their long-term averages. The stock is also backed by roughly $21 per share net asset value, using the company’s recent $35.5 million sale of an old ship as a guide. (This means the company could theoretically sell its entire fleet, pay off debt, and still have roughly $21 per share in cash left over for shareholders.)
With the stock trading at less than $19 today, this seems like a trade worth taking.
Small Stocks to Buy #3: Moonshot Biotech
The biotechnology industry relies heavily on financing. New drugs can take years and billions of dollars to develop before they reach the commercial stage, making biotechnology one of the most interest rate-sensitive corners of the market.
Lower prices can provide a real opportunity here. Not only are discount rates lower (making future cash flows more valuable today), but cash-starved companies can borrow at a lower cost to finance the growth they need.
This leads us to our third choice:
Nautilus Biotechnology Company (bull).
Nautilus is a revenue-generating startup building what could become a standard platform for protein analysis. The administration expects commercial launch by late 2026, with installation operations to begin in early 2027.
Here’s why this is important. Today’s standard approach — called mass spectrometry — requires researchers to chop proteins into pieces, then try to reconstruct what they have. It’s slow, labor-intensive, and prone to error in proteins it’s never seen before.
The Nautilus system works differently: It analyzes intact proteins, using fluorescent probes to map their structure without breaking anything apart. Think of it like reading a book instead of tearing it apart and guessing the plot from the scraps.
The practical upside is important. Diseases such as Alzheimer’s disease, Parkinson’s disease, and amyotrophic lateral sclerosis involve subtle protein variations that current tools routinely miss. A better map means better drug development, and perhaps faster answers to questions that researchers have been stuck on for decades.
The company is on the right track. A successful prototype was unveiled in February 2026, and prestigious institutions such as the Buck Institute are already testing the machines. Insiders have been buying – five over the past year, including one in March. This is one of my favorite “buy” signals in the biotech world.
If prices fall and Nautilus hits its schedule, this is the type of stock that could move significantly. If they don’t, it carries real risks. But according to the Lewis system, the risk and reward here are worth taking seriously.
Don’t rule out interest rate cuts completely just yet
Most people on Wall Street have given up hope of a rate cut this year.
If inflation jumped to 3.3% in March due to higher gas prices, surely the Fed would have to step in by raising interest rates?
Betting markets moved in the same direction. More than half of bettors now expect zero cuts this year.
However, December 2026 is still far away, and a lot can happen in seven months. In fact, we could be seeing a decline…or even a recession.
Thursday, Whirlpool Company (WHR) He warned that the US-Iranian conflict had caused “the level of industry to decline to the level of stagnation.” In prepared earnings remarks, the device maker’s CEO said he no longer expects a full recovery in 2026. This comes days after the CEO Kraft Heinz Company (KHC) Clients “actually run out of money at the end of the month,” he said.
Friday’s “flat” jobs report numbers are also weaker than they appear. The chart below shows what employment additions actually looked like in a broader historical context.
Monthly US Nonfarm Payrolls added
Source: Federal Reserve of St. Louis
That’s why it’s important that you listen to him Louis Navellier’s special broadcast on May 13 at 1 p.m. ET. During this free event, he’ll explain why he thinks interest rate cuts are on the table, and why penny stocks are one of the best places to invest right now.
Additionally, Lewis will discuss the rest of his picks for the 53 small-cap “exit list” and reveal the one stock – both name and ticker – that he believes is particularly well-positioned for the next phase of the market.
Register for the May 13 broadcast here.
Until next week,
Thomas Young, CFA
market analyst, Investor location
