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THE WOODLANDS, Texas--(BUSINESS WIRE)--Perma-Pipe International Holdings, Inc. (NASDAQ: PPIH) announced today that it has been added as a member of the Russell 2000® and the Russell 3000® indexes, effective when the US market opens on June 29, as part of the first 2026 Russell indexes reconstitution.

The June reconstitution of the Russell US indexes captures up to the 4,000 largest US stocks as of April 30, ranking them by total market capitalization. Membership in the Russell 3000® Index, which remains in place for half a year beginning 2026, means automatic inclusion in the large-cap Russell 1000® Index or small-cap Russell 2000® Index as well as the appropriate growth and value style indexes. FTSE Russell determines membership for its Russell indexes primarily by objective, market-capitalization rankings and style attributes.

Russell indexes are widely used by investment managers and institutional investors for index funds and as benchmarks for active investment strategies. According to data as of the end of June 2025, about $12.2 trillion in assets are benchmarked against the Russell US indexes, which belong to FTSE Russell, the global index provider. For more information on the Russell 2000 and 3000 Indexes and the Russell indexes reconstitution, go to the “Russell Reconstitution” section on the FTSE Russell website.

“Our inclusion in the Russell 2000 and Russell 3000 indexes is a meaningful milestone for Perma-Pipe and a reflection of the progress we have made in growing the Company and creating value for our shareholders," said Saleh Sagr, President and Chief Executive Officer of Perma-Pipe. "Building on our record fiscal 2025 results, this recognition enhances our visibility within the investment community and supports our ongoing commitment to greater transparency and engagement with shareholders and investors as we continue to execute our global growth strategy."

Perma-Pipe International Holdings, Inc.

Perma-Pipe International Holdings, Inc. (the “Company”) is a global leader in pre-insulated piping and leak detection systems for oil and gas gathering, district heating and cooling, and other applications. It uses its extensive engineering and fabrication expertise to develop piping solutions that solve complex challenges regarding the safe and efficient transportation of many types of liquids. In total, the Company has operations at fourteen locations in seven countries.

Forward-Looking Statements

Certain statements and other information contained in this press release that can be identified by the use of forward-looking terminology constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are subject to the safe harbors created thereby, including, without limitation, statements regarding the expected future performance and operations of the Company. These statements should be considered as subject to the many risks and uncertainties that exist in the Company's operations and business environment. Such risks and uncertainties include, but are not limited to, the following: (i) fluctuations in the price of oil and natural gas and its impact on customer order volume for the Company's products; (ii) the Company’s ability to purchase raw materials at favorable prices and to maintain beneficial relationships with its suppliers; (iii) decreases in government spending on projects using the Company’s products, and challenges to the Company’s non-government customers’ liquidity and access to capital funds; (iv) the Company’s ability to repay its debt and renew expiring international credit facilities; (v) the Company’s ability to effectively execute its strategic plan and achieve sustained profitability and positive cash flows; (vi) the Company's ability to collect a long-term account receivable related to a project in the Middle East; (vii) the Company’s ability to interpret changes in tax regulations and legislation; (viii) the Company's ability to use its net operating loss carryforwards; (ix) reversals of previously recorded revenue and profits resulting from inaccurate estimates made in connection with the Company’s "over-time" revenue recognition; (x) the Company’s failure to establish and maintain effective internal control over financial reporting; (xi) the timing of order receipt, execution, delivery and acceptance for the Company’s products; (xii) the Company’s ability to successfully negotiate progress-billing arrangements for its large contracts; (xiii) aggressive pricing by existing competitors and the entrance of new competitors in the markets in which the Company operates; (xiv) the Company’s ability to manufacture products free of latent defects and to recover from suppliers who may provide defective materials to the Company; (xv) reductions or cancellations of orders included in the Company’s backlog; (xvi) risks and uncertainties specific to the Company's international business operations; (xvii) the Company’s ability to attract and retain senior management and key personnel; (xviii) the Company’s ability to achieve the expected benefits of its growth initiatives; (xix) the impact of pandemics and other public health crises on the Company and its operations; and (xx) the impact of cybersecurity threats on the Company’s information technology systems. Shareholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements made herein are made only as of the date of this press release and we undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. More detailed information about factors that may affect our performance may be found in our filings with the Securities and Exchange Commission, which are available at https://www.sec.gov and under the Investor Center section of our website (http://investors.permapipe.com.)

More News From Perma-Pipe International Holdings, Inc.

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THE WOODLANDS, Texas--(BUSINESS WIRE)--Perma-Pipe International Holdings, Inc. (Nasdaq: PPIH), a global leader in pre-insulated piping and leak detection systems, today announced the appointment of Nancy Zakhour and Saleh Sagr to its Board of Directors, effective April 8, 2026. Ms. Zakhour will serve as an independent director and a member of the Board's Audit, Compensation, and Nominating and Corporate Governance Committees. Mr. Sagr will serve as a director. Ms. Zakhour is a dynamic energy ex.

THE WOODLANDS, Texas--(BUSINESS WIRE)--Perma-Pipe International Holdings, Inc. (NASDAQ: PPIH) today announced financial results for the fourth quarter and 2025 fiscal year ended January 31, 2026.

“For the three months ended January 31, 2026, net sales were $55.1 million, an increase of $10.1 million, or 22.4%, compared to $45.0 million in the same quarter of the prior year. Growth was driven by higher sales volumes in both the Middle East and North America. Gross profit was $17.3 million, up $2.1 million from $15.2 million last year, reflecting higher activity levels. Selling, general and administrative expenses increased slightly to $10.3 million from $9.7 million, primarily due to higher payroll costs, partially offset by lower bonus costs. The Company’s effective tax rate (“ETR”) was 12.3%, compared to 32.1% in the prior-year quarter, reflecting the impact of product mix across various tax jurisdictions. As a result, net income attributable to common stock was $4.9 million, an increase of $3.1 million, or 172.2%, compared to $1.8 million in the fourth quarter of fiscal 2024,” noted President and CEO Saleh Sagr.

“For the year ended January 31, 2026, net sales were $210.9 million, an increase of $52.5 million, or 33.1%, compared to $158.4 million in the prior year period. The increase was primarily attributable to higher sales volumes in both the Middle East and North America. Gross profit was $69.5 million, compared to $53.2 million in the prior year period, reflecting increased activity levels. Selling, general and administrative expenses were $40.1 million, up from $32.9 million, due to higher payroll and professional fees, including approximately $1.0 million related to Sarbanes-Oxley Section 404 compliance in connection with our transition from a non-accelerated filer to an accelerated filer. This also includes a one-time compensation charge of approximately $2.0 million related to the departure of the previous CEO. The Company’s effective tax rate was 24.9%, compared to 29.1% in the prior-year period. The change in the Company's effective tax rate reflects product mix across various tax jurisdictions and the Company’s overall reduction in its effective tax rate for the year was partially offset by the impact of a tax limitation related to the one-time charge associated with the prior CEO’s departure. Net income attributable to common stock was $17.0 million, an increase of $8.0 million, or 88.9%, compared to $9.0 million in fiscal 2024,” Mr. Sagr commented.

President and CEO Saleh Sagr added: “Our backlog stood at $121.6 million as of January 31, 2026. This reflects strong operational execution as we successfully accelerated the conversion of existing sales orders into realized revenue. Our backlog remains at historically strong levels. We continue to see meaningful multi-regional expansion, particularly across North America and the Middle East, reinforcing sustained global demand for our solutions.”

“Our fiscal 2025 results represent a landmark achievement for the Company. Total revenues of $210.9 million and net income attributable to common stockholders of $17.0 million mark our highest level of earnings in the Company’s modern operating history, driven not only by strong top-line growth but also by improved margins. This record performance was driven by broad-based strength across our global footprint, with significant growth contributions from the Middle East and North America. Our ability to scale across these diverse markets while maintaining disciplined margin performance has enabled us to convert top-line momentum into meaningful bottom-line value for our shareholders.”

“To sustain this trajectory, we have entered into a long-term lease for a new production facility in Ohio (AI data centers). This strategically located hub will serve as a primary logistics center for the Northeast and New England corridors, enabling us to localize production for our district heating and cooling offerings and capture additional regional market share. The region’s favorable and flexible labor environment further enhances our operational agility.”

“Supporting our long-term growth strategy, we also finalized a new credit facility with J.P. Morgan Chase. This agreement represents a watershed moment for the Company. We have standardized our borrowing platform globally at significantly improved terms. This transition optimizes our cost of capital while providing the liquidity necessary to support the next phase of our global expansion,” Mr. Sagr continued.

“With record earnings as our foundation and a modernized capital structure as our fuel, we enter the remainder of 2026 with strong confidence in our ability to scale our global operations and drive meaningful shareholder returns,” Mr. Sagr concluded.

2025 Results

Net sales were $210.9 million for the fiscal year ended January 31, 2026, an increase of $52.5 million, or 33.1%, from $158.4 million in the prior year. The growth was primarily driven by higher sales volumes across our key markets in the Middle East, Canada, and the United States

Gross profit was $69.5 million, or 33% of net sales, compared to $53.2 million, or 34% of net sales, in the prior year. The $16.3 million was driven by higher sales volumes and consistent gross margins globally.

General and administrative expenses were $35.3 million, compared to $28.0 million in the prior year. The increase of $7.3 million was primarily related to higher compensation costs and professional fees, including approximately $1.0 million relating to Sarbanes-Oxley 404 compliance in connection with our transition from a non-accelerated filer to an accelerated filer. This also includes a one-time compensation charge of approximately $2.0 million related to the departure of the previous CEO.

Selling expenses were $4.7 million, compared to $4.9 million in the years ended January 31, 2026 and 2025, respectively. The decrease of $0.2 million was primarily driven by lower payroll expenses during the year.

Interest expense, net was $1.8 million and $1.9 million in the years ended January 31, 2026 and 2025, respectively. The decrease of $0.1 million was the result of an overall reduction in interest rates during the year.

The Company's worldwide effective tax rates ("ETR") were 24.9% and 29.1% in the years ended January 31, 2026 and 2025, respectively. The change in ETR was largely due to changes in the mix of income and loss in various tax jurisdictions and the domestic Global Intangible Low-Taxed Income ("GILTI") inclusion.

Net income attributable to common stock was $17.0 million, or $ 2.09 per diluted share, for the fiscal year ended January 31, 2026, compared to $9.0 million, or $ 1.12 per diluted share, in the prior year. The 89% increase was driven by the significant growth in sales volumes and operational efficiencies discussed above, partially offset by the one-time charges previously noted and amounts attributable to non-controlling interest.

Perma-Pipe International Holdings, Inc.

Perma-Pipe International Holdings, Inc. (the “Company”) is a global leader in pre-insulated piping and leak detection systems for oil and gas gathering, district heating and cooling, and other applications. It uses its extensive engineering and fabrication expertise to develop piping solutions that solve complex challenges regarding the safe and efficient transportation of many types of liquids. In total, the Company has operations at thirteen locations in seven countries.

Forward-Looking Statements

Certain statements and other information contained in this press release that can be identified by the use of forward-looking terminology constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are subject to the safe harbors created thereby, including, without limitation, statements regarding the expected future performance and operations of the Company. These statements should be considered as subject to the many risks and uncertainties that exist in the Company's operations and business environment. Such risks and uncertainties include, but are not limited to, the following: (i) fluctuations in the price of oil and natural gas and its impact on customer order volume for the Company's products; (ii) the Company’s ability to purchase raw materials at favorable prices and to maintain beneficial relationships with its suppliers; (iii) decreases in government spending on projects using the Company’s products, and challenges to the Company’s non-government customers’ liquidity and access to capital funds; (iv) the Company’s ability to repay its debt and renew expiring international credit facilities; (v) the Company’s ability to effectively execute its strategic plan and achieve sustained profitability and positive cash flows; (vi) the Company's ability to collect a long-term account receivable related to a project in the Middle East; (vii) the Company’s ability to interpret changes in tax regulations and legislation; (viii) the Company's ability to use its net operating loss carryforwards; (ix) reversals of previously recorded revenue and profits resulting from inaccurate estimates made in connection with the Company’s "over-time" revenue recognition; (x) the Company’s failure to establish and maintain effective internal control over financial reporting; (xi) the timing of order receipt, execution, delivery and acceptance for the Company’s products; (xii) the Company’s ability to successfully negotiate progress-billing arrangements for its large contracts; (xiii) aggressive pricing by existing competitors and the entrance of new competitors in the markets in which the Company operates; (xiv) the Company’s ability to manufacture products free of latent defects and to recover from suppliers who may provide defective materials to the Company; (xv) reductions or cancellations of orders included in the Company’s backlog; (xvi) risks and uncertainties specific to the Company's international business operations; (xvii) the Company’s ability to attract and retain senior management and key personnel; (xviii) the Company’s ability to achieve the expected benefits of its growth initiatives; (xix) the impact of pandemics and other public health crises on the Company and its operations; and (xx) the impact of cybersecurity threats on the Company’s information technology systems. Shareholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements made herein are made only as of the date of this press release and we undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. More detailed information about factors that may affect our performance may be found in our filings with the Securities and Exchange Commission, which are available at https://www.sec.gov and under the Investor Center section of our website (http://investors.permapipe.com.)

The Company's fiscal year ends on January 31. Years, results, and balances described as 2025, 2024, and 2023 are for the fiscal year ending January 31, 2026, 2025, and 2024, respectively.

Additional information regarding the Company's financial results for the fiscal year ended January 31, 2026, including management's discussion and analysis of the Company's financial condition and results of operations, is contained in the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 2026, which will be filed with the Securities and Exchange Commission on or about the date hereof and will be accessible at www.sec.gov and www.permapipe.com. For more information, visit the Company's website.

PERMA-PIPE INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

Three Months Ended January 31,

Year Ended January 31,

2026

2025

2026

2025

Net sales

$

55,129

$

44,987

$

210,925

$

158,384

Gross profit

17,337

15,171

69,488

53,248

Total operating expenses

10,367

9,732

40,039

32,947

Income from operations

6,970

5,439

29,449

20,301

Interest expense, net

505

451

1,822

1,940

Other (expense) income, net

(58

)

262

(134

)

107

Income before income taxes

6,407

5,250

27,493

18,468

Income tax expense

787

1,685

6,844

5,377

Net income

$

5,620

$

3,565

$

20,649

$

13,091

Less: Net income attributable to non-controlling interest

702

1,805

3,614

4,108

Net income attributable to common stock

$

4,918

$

1,760

$

17,035

$

8,983

Weighted average common shares outstanding

Basic

8,103

7,983

8,047

7,956

Diluted

8,206

8,073

8,148

8,015

Earnings per share

Basic

$

0.61

$

0.22

$

2.12

$

1.13

Diluted

$

0.60

$

0.22

$

2.09

$

1.12

  Note: Earnings per share calculations could be impacted by rounding.

PERMA-PIPE INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

January 31,

2026

2025

ASSETS

Current assets

$

146,734

$

108,802

Long-term assets

70,752

56,439

Total assets

$

217,486

$

165,241

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities

$

79,789

$

54,063

Long-term liabilities

31,396

28,073

Total liabilities

111,185

82,136

Non-controlling interests

15,663

10,967

Stockholders' equity

90,638

72,138

Total liabilities and stockholders' equity

$

217,486

$

165,241

PERMA-PIPE INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURE
ADJUSTED INCOME BEFORE TAX
(In thousands)
(Unaudited)

The following information contains a reconciliation of the non-GAAP financial measure of adjusted income before income tax and income before tax prepared in accordance with generally accepted accounting principles ("GAAP") for the three and twelve months ended January 31, 2026, and 2025, respectively. This reconciliation is intended to provide investors with useful information in evaluating the Company's performance. Adjusted income before tax includes certain adjustments as identified below. This measure is not considered an alternative to income before tax or other financial measures of performance that are prepared in accordance with GAAP. The Company believes that the exclusion of certain items from income before tax allows investors to more effectively evaluate the Company's operating performance and identify trends that might not be apparent due to the variability and infrequent nature of these items. In addition, the Company believes this measure provides meaningful information to investors when comparing results between periods and performance with respect to the Company's peers.

Adjustments were made for certain items as follows: (i) a one-time charge associated with the acceleration of executive compensation; (ii) a one-time litigation settlement charge; and (iii) other non-recurring items. These non-GAAP measures are provided to enhance the user's overall understanding of the company’s current financial performance and may not be comparable to similarly titled measures used by other companies.

The following table provides a reconciliation of the GAAP and non-GAAP financial measures:

For the three months ended

For the twelve months ended

January 31,

2026

January 31,

2025

January 31,

2026

January 31,

2025

Income before income tax (GAAP as reported)

$

6,407

$

5,250

$

27,493

$

18,468

Acceleration of certain executive compensation

-

-

2,018

-

Litigation settlement

-

-

-

35

Other one-time charges

-

-

88

517

Adjusted income before tax

$

6,407

$

5,250

$

29,599

$

19,020

More News From Perma-Pipe International Holdings, Inc.

Perma-Pipe International (PPIH +1.50%) stock is a little-known microcap stock (market cap under $300 million) that has huge growth potential stemming from 3 main catalysts:

The eventual rebuilding needs of the Middle East following the Iran war; Middle East economic growth and modernization in general; The surging global artificial intelligence (AI) data center build-out, which should be a multiyear phenomenon.

Image source: Perma-Pipe International.

When the Iran war ends, the Middle East will have major and long-lasting rebuilding needs The United States-Israel war against Iran, which began on Feb. 28, expanded to include much of the Middle East. Prior to the recent, temporary ceasefire, Iran had been striking U.S. military bases and other targets located in Middle Eastern countries that it considers to be complicit with the U.S. and Israel.

When the war ends, the Middle East will face major, long-lasting rebuilding needs, as its infrastructure has been severely damaged. Stocks of select companies that are involved in this rebuilding should get a significant boost.

The companies that should benefit most from the rebuilding are those that are small enough that rebuilding work will move the needle for their finances. Investors should also favor companies with growth catalysts beyond rebuilding work. Perma-Pipe International meets these criteria.

Perma-Pipe's key stock stats Company/Index

Market Cap

Trailing P/E

1-Year Stock Change

5-Year Stock Change

Perma-Pipe International $244 million

14.4

153%359%S&P 500 Index --

--

38.7%82% Data sources: Yahoo! Finance, YCharts, and finviz.com. P/E = price-to-earnings ratio. Data to April 21, 2026.

Here are some positive financial points:

Cash flow positive, not just net income positive Insiders own nearly 11% of shares Low trailing-12-month price-to-earnings (P/E) ratio of 14.4 Manageable debt-to-equity ratio

Today's Change

(

1.50

%) $

0.38

Current Price

$

25.65

Perma-Pipe: Business snapshot Perma-Pipe describes itself as a "global leader in engineered pipe services, offering a robust portfolio of capabilities in insulation solutions, containment systems, anti-corrosion coatings, engineering and technical support, material sciences, custom fabrication and leak detection technology."

The Woodlands, Texas-based company's primary traditional end markets are oil and gas, and district energy (heating and cooling). Its newest end market is the AI-enabled data center market.

District energy systems have "one or more central plants producing hot water, steam, and/or chilled water, which then flows through a network of insulated pipes to provide hot water, space heating, and/or air conditioning for nearby buildings," according to the U.S. Department of Energy.

These systems, which are highly energy-efficient, are often found in urban central business districts, college campuses, airports, industrial complexes, and -- notably for the Middle East's rebuilding and modernization needs -- military bases.

Perma-Pipe has 14 operating locations across seven countries, with a heavy concentration in the U.S., Canada, and the Middle East.

Revenue breakdown by country in the fiscal year ended Jan. 31, 2026:

U.S.: 28% Canada: 23% United Arab Emirates (UAE): 22% Saudi Arabia: 22% Other: 5% Perma-Pipe looks poised to benefit from the rebuilding of the Middle East Perma-Pipe is small enough that rebuilding contracts could send its revenue and earnings soaring. Moreover, it has a strong presence -- and, by extension, existing connections -- in the Middle East, a region that has been helping fuel its robust recent growth.

Indeed, Perma-Pipe has called growing its Saudi Arabia business a "strategic priority," and has expanded its manufacturing capabilities in the country. This makes good sense given that the country ranks as the largest economy in the Persian Gulf, driven largely by its massive oil production and exports.

A huge catalyst for its oil and gas market came in September 2025 In September, Perma-Pipe announced that its Saudi Arabian business unit had received formal technical and commercial approval from state-owned Saudi Aramco, the world's largest oil company.

"This approval significantly expands Perma-Pipe's business opportunities in the Kingdom, enabling the Company to directly serve the oil and gas sector," it said in the press release. Until this time, Perma-Pipe's access to the Saudi market was primarily limited to district heating and cooling. "With this new approval, the Company is now well-positioned to participate in Saudi Arabia's pipe coating market, the largest in the Middle East and among the largest globally."

A relatively new growth catalyst: AI data center market Perma-Pipe has entered the data center market, which is experiencing explosive growth driven by the rapid adoption and advances in AI. It has won contracts in this business since at least 2025.

Revenue from this market is likely still a small share of its overall total, but it's growing rapidly. And with Perma-Pipe's expertise in cooling systems and leak detection systems, it has strong growth potential in this market, both in the U.S. and the Middle East.

Indeed, on March 19, Perma-Pipe issued a press release updating investors on its plans to accelerate growth by investing in a manufacturing facility in the Northeast U.S. region, primarily to serve AI data center customers. It expects the facility to become operational in the second quarter of 2026.

Perma-Pipe's Middle East ties provide an opportunity -- but also increase its risk level In that same release, the company updated investors on the status of its Middle East operations. "Despite ongoing regional conflicts, our business operations have not been impacted. We have implemented comprehensive business continuity plans designed to mitigate potential risks and aim to ensure uninterrupted service to our customers and maintain operational stability and safety across all our facilities," CEO Saleh Sagr said.

Data by YCharts.

Perma-Pipe's financials On April 16, Perma-Pipe released its fourth-quarter and full-year results for fiscal 2025, which ended Jan. 31, 2026. For the year, net sales were $210.9 million, up 33% year over year. Growth was primarily driven by higher sales volumes in the Middle East and North America.

Net income was $17.0 million, up 89% from the prior year, translating into earnings per share (EPS) soaring 87% to $2.09. Growth was driven by higher sales, improved margins, and a lower effective income tax rate stemming from the mix of jurisdictions in which sales were made. Absent the latter factor, earnings growth was still strong with net income before income taxes surging 49%.

U.S. businesses usually pay significantly lower corporate income taxes in Saudi Arabia than in the U.S., which should be a long-term positive for Perma-Pipe's profits.

Backlog remains at historically high levels. It was $121.6 million at the end of fiscal 2025, down somewhat from $138.1 million at the start of the fiscal year.

The company does not provide guidance. But its backlog, combined with CEO comments in the earnings release, suggests it is poised for another great year in fiscal 2026 and beyond.

Perma-Pipe stock has huge growth potential, but also a higher risk level Perma-Pipe International has huge growth potential stemming from 3 main catalysts: (1) eventual rebuilding needs of the Middle East, (2) Middle East economic growth and modernization in general, and (3) the surging global AI data center build-out, which should be a multiyear phenomenon.

Moreover, the district cooling market in Saudi Arabia and the UAE, in particular, is projected to grow at a good clip, as these countries build large-scale mixed-use projects.

However, the company's heavy concentration in the Middle East makes it vulnerable to risks stemming from the Iran war and future conflicts in the region. Its small size relative to competitors also increases its risk level. But with its growth dynamics and low P/E ratio, it is a stock that risk-tolerant investors might find attractive.

Listen to the audio version of this article (generated by AI).

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

Thomas Yeung is a market analyst and portfolio manager of the Omnia Portfolio, the highest-tier subscription at InvestorPlace. He is the former editor of Tom Yeung’s Profit & Protection, a free e-letter about investing to profit in good times and protecting gains during the bad.