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Tom Young is here with your Sunday digest.
Right now, Wall Street is crowded into the same handful of stocks. Everyone has the same big names and semiconductor names. Everyone is chasing the same returns. Everyone assumes that interest rates will remain higher for longer.
This is exactly why I think penny stocks may be one of the most interesting opportunities in the market today.
Last week, I featured three penny stocks from InvestorPlace Senior Analyst “Exclusion List” by Louis Navier – A group of 53 small companies described by his regime as being extraordinarily well placed for the next stage of the market.
Timing was important. Last Wednesday, the Senate confirmed Kevin Warsh as the 17th Chairman of the Federal Reserve. Warsh has historically favored lower interest rates, and Lewis believes the market may still be undervaluing the odds of interest rates falling later this year.
Now, to be clear, there is still a lot of uncertainty here. Gasoline and food prices are rising rapidly, and most investors believe that inflation may force the Fed to keep interest rates high for longer – or even raise interest rates.
But that’s exactly the point.
When “everyone knows” the same thing, opportunities tend to arise elsewhere – especially in smaller companies that Wall Street often ignores.
Today, I want to introduce you to three more penny stocks from Lewis’s exclusion list.
And if you want to see the full list of 53 stocks — plus Lewis’s full case for why he thinks we may be entering into one of the most important small-cap opportunities in years — you can Watch a limited-time replay of his presentation here.
List of Small Cap Stocks to Buy #1: Data Centers…and Oil?
It’s been an excellent several quarters for our first company. AI data center construction has caused shortages throughout the construction supply chain, and shares of this Houston-based company are up 130% since 2025:
Perma Pipe International Holdings (PPIH).
Perma-Pipe is a manufacturer of specialty piping systems – layered, insulated pipes that go into everything from heating and cooling systems to oil and gas pipelines. The company also sells leak detection systems.
These products have caught on in data centers. Roughly 30% to 40% of an AI data center’s total energy use goes to cooling, so better insulated piping quickly becomes a cost advantage.
It is fitting that Perma-Pipe sells the largest selection of these insulated pipes in the world. For example, the XTRU-THERM production line can operate as low as -320°F, while TRACE-THERM reaches up to 1,200°F. They also provide corrosion resistant pipes, economical pipes, fire resistant pipes, etc.
The demand for Perma-Pipe products has proven to be insatiable. In March 2026, management announced that it would add a new production facility in Ohio specifically for AI data centers. Revenues rose 33% last year.
Better yet, Perma-Pipe is an oil and gas play hiding in plain sight.
In early 2020, the company began expanding into the Middle East. Governments in Kingdom of Saudi Arabia, Qatarand outside were looking for suppliers for their district cooling projects (central air conditioning on a massive scale), and Perma-Pipe turned out to be a convenient “one-stop-shop” for these mega-projects. The American company not only offers a wide range of pipes for domestic cooling, but can also supply oil and gas pipelines vital to the region’s economy. This has greatly simplified the approvals process and led to the construction of several PermaPipe plants in the region.
In fact, Perma Pipe’s expansion was so successful that the company eventually promoted the head of its Middle East operations, Saleh Sakr, to CEO in 2025.
The near-closure of the Strait of Hormuz has put giant pipeline projects back on the table. Over the past few months, the Saudi government has floated the idea of expanding the east-west pipeline to avoid a blockade of the Persian Gulf. The UAE is exploring a second pipeline to increase existing capacity to the Gulf of Oman. Syria and Israel have proposed building pipelines across the Mediterranean to completely bypass the disputed area.
Any of these projects could provide a windfall for Perma Pipe, which generated nearly half of its sales from the Middle East in 2025. Oil and gas pipelines require much more pipe than single data center projects, and even repairing damage from Iranian strikes could cost billions.
Thus, AI data centers and the need for new infrastructure in the Middle East give PermaPipe two distinct catalysts beyond interest rates. Analysts are only expecting an 8% increase in revenue this year (and zero growth in earnings), which I think underestimates the opportunity the company has in front of it.
If investors He does If we focus on smaller-cap stocks with lower interest rates, PPIH’s strong trajectory may still have room to continue.
Exclusion List for Small-Cap Stocks to Buy #2: Backup for the Future
Today’s second pick is a battery maker that is also quickly transforming itself into an AI data center supplier:
Electrovaya Company (ELVA).
This small Canadian company has built its business around cutting-edge lithium-ion batteries for electric forklifts and other warehouse equipment. This core market helped drive 43% sales growth last year and helped shift the company from negative earnings to positive earnings.
It is important to note that Electrovaya uses a special ceramic composite separator (CCS) called SEPARION in their products. This allows batteries to last three to five times longer than usual and charge much faster, making them less likely to catch fire. (Meanwhile, regular lithium-ion batteries use a thinner, plastic-like membrane that tends to soften and shrink.)
These are very important features for warehouse forklifts (where fires can be devastating) and have allowed ELVA to reach major customers such as Walmart Inc. (WMT) and Home Depot Inc. (HD).
But the more compelling story is where Electrovaya goes next: robotics, automation, defense, and (most importantly) energy storage in AI data centers.
In April 2025, the company began assembling the battery system at its new 52-acre “gigafactory” in Jamestown, New York. The company plans to start producing lithium-ion cells and modules in mid-2026, with much of this aimed at powering the next generation of robots, drones and artificial intelligence data centres.
For AI data centers, Electrovaya is developing an 800-volt DC battery system specifically to meet new standards set by Nvidia Corp. (NVDA). AI chips require much more power than before (so higher voltages are ideal), and batteries are needed to provide power during the crucial minutes it takes to start diesel generators or switch power sources. As every high school student with a writing project knows, even a split-second power outage can be disastrous for data recovery. Electrovaya’s SEPARION technology is particularly suitable for high voltages, where fire risks are high.
The company expects to begin commercial deliveries in 2027.
Meanwhile, Electrovaya’s energy-dense 48V batteries are supposed to be essential for robots and drones, as the batteries are constantly being charged and discharged. Revenue is expected to rise another 35% this year before accelerating to a 50% growth rate in fiscal 2027 as the giant Jamestown plant reaches full scale.
Exclusion List for Small Cap Stocks to Buy #3: The Toyo Alternative
Last week, I tagged Toyo Corp. (TOYO) as a stock to buy. The company recently acquired a 1-GW solar manufacturing plant in Texas, and plans to expand it to 2.5 GW this year. Import tariffs and rising electricity prices mean Toyo should see strong demand for its highly efficient solar panels.
However, Toyo’s fraud risks are very high due to its complex structure – fairly typical of Japanese companies – and numerous related-party transactions. Its auditor also has a long history of failed regulatory inspections. So, I’d like to point out a solar alternative maker this week:
TYGO Energy Company (TYGO).
The Silicon Valley-based company has a much simpler corporate structure and a more well-known auditor, Deloitte & Touche.
It also has a similar growth profile, with revenues expected to double by 26%. annually Through 2028. Earnings are expected to turn positive this year, which is a historically bullish sign.
Tigo’s “secret sauce” is its flagship product, the Module Level Power Electronics Enhancer (MLPE) TS4.
Typically, solar arrays are limited by their weakest panels. Uneven aging or transient draws create bottlenecks, reducing the throughput of the entire system. The TS4 MLPE optimizers solve this problem with some electrical engineering, allowing each board to operate near its maximum output. And unlike competitors like SolarEdge Technologies Inc. (SEDG) and Enphase Energy Inc. (ENPH), Tigo products do not rely on special adapters.
This is what makes Tigo products so popular among the “re-empowerment” markets. Homeowners can add Tigo’s TS4 enhancers to older systems without tearing out existing parts, and revenue from this segment has jumped to 20% of total U.S. sales. The systems are also popular among utilities, which are wary of locking themselves into proprietary SolarEdge or Enphase systems.
The company also performs very well in overseas markets, especially Europe and Australia. Both regions are seeing rising electricity prices, and I expect solar installations to rise as utilities seek alternatives to fossil fuels.
Thus, shares look very reasonable at $4 today. Demand for solar energy is on the rise, and Teego provides a key piece of that puzzle.
Invest away from the crowds
Earlier, I noted that most investors see a near-zero chance of a rate cut this year. “Everyone knows” rates remain high.
However, six months ago, everyone “knew” that it was Kevin Hassett (not Kevin Warsh) who would be the next Fed Chairman. Futures markets “knew” oil would trade at $56 by the end of 2026.
That’s why investing against the crowd sometimes works so well. You enter trades before anyone realizes what is happening. Even if interest rates are not cut this year, these three picks should do well.
- PPIH is growing revenues by 33% annually and is at the center of AI data center construction and a potential pipeline boom in the Middle East.
- ELVA is building a massive factory to supply batteries to Nvidia-spec robots, drones and data centers.
- TYGO is riding a global solar boom with a product that works with any existing system.
These three choices – and The other three are from last week – It’s just a starting point.
Lewis has identified 53 small businesses that are positioned to benefit if the new Fed starts cutting interest rates, and explains exactly why he believes those cuts will come in his plan. New and free presentation.
This stream is only available for a limited time, so I urge you to watch it now Before it goes offline.
Until next week,
Thomas Young, CFA
market analyst, Investor location
