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Tom Yeung here with your Sunday Digest.

Right now, Wall Street is crowding into the same handful of stocks. Everyone owns the same mega-caps and semiconductor names. Everyone is chasing the same returns. And everyone assumes interest rates are staying higher for longer.

That’s exactly why I think smaller stocks may be one of the most interesting opportunities in the market today.

Last week, I introduced three small-cap stocks from InvestorPlace Senior Analyst Louis Navellier’s “Exclusion List” — a group of 53 smaller companies his system has flagged as unusually well positioned for the next phase of the market.

The 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 Louis believes the market may still be underestimating the odds of lower rates later this year.

Now, to be clear, there’s still plenty of uncertainty here. Gasoline and food prices are rising fast, and most investors believe that inflation could force the Fed to keep rates higher for longer – or even hike rates.

But that’s exactly the point.

When “everyone knows” the same thing, opportunities tend to emerge elsewhere — especially in smaller companies that Wall Street often ignores.

Today, I want to introduce you to three more small-cap stocks from Louis’ Exclusion List.

And if you’d like to see the full list of 53 stocks — along with Louis’ full case for why he believes we may be entering one of the most important small-cap opportunities in years — you can watch the limited-time replay of his presentation right here.

Exclusion List Small-Cap Stock to Buy No. 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 firm have risen 130% since 2025:

Perma-Pipe International Holdings Inc. (PPIH).

Perma-Pipe is a manufacturer of specialty piping systems – the insulated, layered 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 with data centers. Roughly 30% to 40% of an AI data center’s total energy usage goes into cooling, so better-insulated piping quickly becomes a cost advantage.

Conveniently, Perma-Pipe sells arguably the world’s widest range of these insulated pipes. Its XTRU-THERM product line, for instance, can operate as low as -320°F, while its TRACE-THERM goes up to 1,200°F. They also offer corrosion-resistant pipes, budget pipes, fire-retardant pipes, and so on.

Demand for Perma-Pipe’s products has proved insatiable. In March 2026, management announced it would add a new production facility in Ohio specifically for AI data centers. Revenues were up 33% last year.

Even better, Perma-Pipe is an oil and gas play hiding in plain sight.

In the early 2020s, the company began expanding into the Middle East. Governments in Saudi Arabia, Qatar, and beyond were seeking suppliers for their district cooling projects (centralized air conditioning at enormous scale), and Perma-Pipe turned out to be a convenient “one-stop-shop” for these megaprojects. Not only did the American firm offer a wide variety of pipes for municipal cooling, but they could also supply oil and gas pipelines crucial to the region’s economy. This vastly simplified the approvals process and led to the construction of multiple Perma-Pipe factories 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 Sagr, to CEO in 2025.

The near-closure of the Strait of Hormuz has now put pipeline megaprojects back on the table. Over the past several months, the Saudi government has floated the idea of expanding its East-West pipeline to avoid the blockade of the Persian Gulf. The United Arab Emirates is exploring a second pipeline to increase current capacity to the Gulf of Oman. Syria and Israel have both suggested building pipelines through to the Mediterranean to bypass the contested region entirely.

Any of these projects could provide a windfall for Perma-Pipe, which generated roughly half of its sales from the Middle East in 2025. Oil and gas pipelines require far more piping than single data center projects, and even repairing the damage from Iranian strikes could cost billions.

And so, AI data centers and the need for new infrastructure in the Middle East give Perma-Pipe two distinct catalysts beyond interest rates. Analysts are projecting only an 8% increase in revenues this year (and zero earnings growth), which I believe understates the opportunity the firm has ahead of it.

And if investors do pivot toward smaller-cap stocks as rates get cut, then PPIH’s strong run may still have room to keep going.

Exclusion List Small-Cap Stock to Buy No. 2: Backup to the Future

The second pick today is a battery maker that’s also quickly turning itself into an AI data center supplier:

Electrovaya Inc. (ELVA).

This Canadian small-cap built its business around high-end lithium-ion batteries for electric forklifts and other warehouse equipment. This core market helped drive 43% sales growth last year and helped flip the firm from negative profits to positive.

It’s important to note that Electrovaya uses a proprietary ceramic composite separator (CCS) called SEPARION in its products. This allows batteries to last three to five times longer than normal and charge up far faster – making them less likely to catch fire. (Meanwhile, normal lithium-ion batteries use a thinner plastic-like membrane that’s prone to softening and shrinking.)

These are extremely important features for forklifts for warehouses (where fires can be devastating) and have allowed ELVA to land major customers like Walmart Inc. (WMT) and Home Depot Inc. (HD).

But the more compelling story is where Electrovaya is going next: robotics, automation, defense, and (most importantly) AI data center energy storage.

In April 2025, the company began battery system assembly at its new 52-acre “gigafactory” in Jamestown, New York. The company plans to begin lithium-ion cell and module production in mid-2026, and much of this is aimed at powering the next generation of robots, drones, and AI data centers.

For AI data centers, Electrovaya is developing an 800-volt DC battery system specifically to meet a new standard set by Nvidia Corp. (NVDA). AI chips require far more energy than before (so higher voltages are ideal), and batteries are needed to supply energy during the crucial minutes it takes to start up diesel generators or switch power sources. As every high schooler with a writing project knows, even a split-second power outage can prove catastrophic for data recovery. Electrovaya’s SEPARION technology is particularly well suited for high voltages, where fire risks are high.

The firm expects commercial deliveries to start in 2027.

Meanwhile, Electrovaya’s energy-dense 48V batteries should prove essential for robots and drones, where batteries are constantly charged and discharged. Revenues are expected to rise another 35% this year before accelerating to a 50% growth rate in fiscal 2027 as its Jamestown gigafactory reaches full scale.

Exclusion List Small-Cap Stock to Buy No. 3: The Toyo Alternative

Last week, I flagged Toyo Corp. (TOYO) as a stock to buy. The company recently acquired a 1-gigawatt solar manufacturing plant in Texas and plans to expand it to 2.5GW this year. Import tariffs and rising electricity prices mean that Toyo should see strong demand for its highly efficient solar panels.

However, Toyo’s fraud risk is quite high due to its complex holding structure – somewhat typical of Japanese companies – and numerous related-party transactions. Its auditor also has a long history of failing regulatory inspections. And so, I’d like to flag an alternative solar maker this week:

Tigo Energy Inc. (TYGO).

The Silicon Valley-based company has a far simpler corporate structure and a more reputable auditor, Deloitte & Touche.

It also has a similar growth profile, with revenues expected to compound 26% annually through 2028. Profits are expected to flip positive this year, a historically bullish sign.

Tigo’s “secret sauce” is its flagship product, the TS4 Module-Level Power Electronics (MLPE) optimizer.

Ordinarily, solar arrays are limited by their weakest panel. Uneven aging or passing clouds create bottlenecks, reducing the output of the whole system. TS4 MLPE optimizers solve this problem with some electrical engineering, allowing every panel to run closer to its maximum output. And unlike rivals like SolarEdge Technologies Inc. (SEDG) and Enphase Energy Inc. (ENPH), Tigo’s products do not rely on proprietary inverters.

That makes Tigo’s products popular among the “repowering” market. Homeowners can add Tigo’s TS4 optimizers to old systems without tearing existing pieces out, and revenues from this segment have jumped to 20% of total U.S. sales. The systems are also popular among utilities, wary of locking themselves into SolarEdge’s or Enphase’s proprietary systems.

The company also does quite well in foreign markets, especially Europe and Australia. Both regions are seeing higher electricity prices, and I expect solar installations to rise as utilities seek alternatives to fossil fuels.

And so, shares look highly reasonable at $4 today. Demand for solar energy is rising, and Tigo provides an essential piece of that puzzle.

Investing Away from the Crowd

Earlier on, I pointed out that most investors see near-zero chance of a rate cut this year. “Everyone knows” rates are staying high.

Yet, six months ago, everyone also “knew” it was Kevin Hassett (not Kevin Warsh) who would be the next Federal Reserve Chair. Futures markets “knew” that oil would trade at $56 by the end of 2026.

That’s why investing against the crowd sometimes works so well. You’re getting into trades before anyone realizes what’s going on. And even if rates aren’t cut this year, these three picks should still perform well.

• PPIH is growing revenues 33% annually and sits at the center of both the AI data center buildout and a potential Middle East pipeline boom.
• ELVA is ramping a gigafactory to supply batteries for robots, drones, and Nvidia-spec data centers.
• TYGO is riding a global solar surge with a product that works with any existing system.

These three picks – and the other three from last week — are just a starting point.

Louis has identified 53 small caps positioned to benefit if the new Fed begins cutting rates, and he explains exactly why he believes those cuts are coming in his brand-new, free presentation.

This broadcast is only available for a limited time, so I urge you to watch it now before it goes offline.

Until next week,

Thomas Yeung, CFA

Market Analyst, InvestorPlace