They have had contracts with Honda, GM, Hyundai, Kia for EV batteries but are pivoting away from EVs. I like the new strategic focus and blended gross margins have good potential to bring profitability as sales continue to come in.

I was in a serious car wreck last year and had a shoulder surgery that left my upper body and back weak. I did physical therapy and got strong enough to function well. It wasn’t enough though. I strained my back last year and more recently my shoulders and now my forearms and tendons on the underside of the forearms and wrist. Any typing now has been flaring up the pain on the underside of the forearms and the wrists.

I have an MRI scheduled in a couple weeks for my wrist. I will have to take some weeks or longer off typing out these long reports to recover and rehab. I may do much shorter articles from my phone. If you are a new subscriber my motto and methodology has always been quality over quantity regardless. My edge in deep value and small-mid caps has always been a focused approach centered on selection.

I am always able to stay active on my X account here. I use my mobile phone for it. I appreciate everyone’s support and understanding.

I liked the most recent Tigo Energy (TYGO) quarter. I did a write-up on that stock awhile ago.

Mtron (MPTI) Invisible Infrastructure of Modern Warfare

Mtron (MPTI) manufactures and sells high-reliability RF frequency and spectrum control products including oscillators, filters, and resonators. They have a long history. The company was formed in 1965 and spun off from LGL Group in 2022 when it began trading on the NYSE. The market cap is just $400 mil. Mtron serves commercial and military aerospace, defense, space, commercial avionics, and the industrial markets. They have 100,000 square feet of manufacturing and design space in two manufacturing sites in the US and one in India.

Mtron has a portfolio of unique products. M-tron's frequency control products (oscillators and resonators) act as precise electronic timekeepers, producing stable signal pulses used in radar, missiles, navigation, and satellites even under extreme temperatures and vibration.

Their spectrum control products (filters and amplifiers) clean up noisy radio signals by blocking interference and only passing the right frequency through, then boost those clean signals.

Their integrated microwave assemblies bundle these components into pre-built, ready-to-install modules giving defense contractors a single, tested solution rather than individual parts to assemble themselves.

65% of their sales comes from aerospace and defense. You can see the full sales breakdown below,

They serve a wide range of markets including defense precision guided munitions, radar, UAV/drones, electronic warfare, space and satellites. They are vertically integrated.

These are the products,

They have an impressive customer base of multi-billion dollar companies including major US defense contractors Lockheed Martin, Northrup Grumman and Raytheon. They also have General Electric, Boeing, Airbus, Honeywell, General Dynamics, Ciena etc. See more customers below,

Read more

NCS Multistage (NCSM) got a buyout offer this week from Weatherford hours after my last piece on it.

Weatherford has an agreement to acquire NCS Multistage. NCS Multistage stockholders have an election to receive either Weatherford common stock or a combination of Weatherford common stock and cash. On a blended basis, this is expected to be the equivalent of 0.463 shares of Weatherford common stock for each NCS Multistage share with up to 19.99% of this payable in cash.

NCSM stockholders will have the option of Weatherford equity or equity and cash mix. The merger is expected to close in the second half of this year. It looks like at current Weatherford prices the deal values NCS at about $126 million, or $48 per share. I believe NCSM is worth a much higher multiple.

I had lost track of how many deep values I’ve covered that have been bought. I looked and this is now the fifth stock to be bought in the three and a half years I’ve been doing this Substack.

Full disclosure: long NCSM stock

I’m working on a full article on Mtron (MPTI), a $393 mil company benefiting from the recent increase in US military spending. The financials since their IPO in 2022 are extremely impressive and warrant a full write-up, especially with the current defense spending spree trend. The stock has minuscule institutional coverage.

I have also been researching identity verification and fraud prevention companies Mitek (MITK) and Red Violet (RDVT) more recently. Red Violet had record quarterly revenue last quarter and EPS grew 28%. I see their industry benefiting greatly over the coming years from enterprise spend increase to combat the increasing threat from AI cyber fraud. They use AI themselves to fight AI fraud. I shared my thoughts on MITK awhile ago on my X/Twitter account.

NCS Multistage Quarter Miss

NCS Multistage (NCSM) is a stock I’ve been covering awhile after initially finding it below net tangible asset value in January last year with very solid operations. Management has done a really good job over the years of managing debt and producing free cash flow and high ROE.

The most recent quarterly results tanked the stock 50%. I looked over the numbers and the conference call, and it looks like an obvious over-reaction.

With the stock now trading at $42 a share the current market cap is just $110 mil. Net tangible assets (NTAV) is $105 mil after last quarter. That $105 figure is all the tangible assets less total debt. The stock is cheap again and almost back in deep value land.

The problem was a big swing in net income driven by weather and setbacks in just Canada. A seasonal slowdown in oil and gas in Canada is not surprising this time of year. It is due to changes in the weather that cause ground thaw and road-weight restrictions.

Other than the weather about half of the setback was customer deferrals and drilling issues. Net earnings was negative at -$0.14 a share vs EPS of $1.51 YoY. Even so they raised full year sales guidance and maintained EBITDA guidance. Sales are still expected to grow year over year. Even in the bad quarter for the bottom-line, cash from operations was positive. Free cash flow was positive too. Here is another key thing. US revenue grew over 100% year over year for the quarter.

They just hit a temporary hurdle with the Canada and Middle East slowdown dragging down gross margins next quarter too. Gross margin this past quarter was 40% and 35% is forecasted next quarter in part because Middle East margins are usually high.

The good news is Canada activity will pick up post-breakup in the back half of the year. ResMetrics synergies will kick in as well, and manufacturing lab assets relocated from Houston to Tulsa and operational synergies are accelerating in the second half of 2026.

Bottom Line

This is a huge over-reaction in the stock price and I see this dip and any subsequent ones below NTAV as opportunities to add to the position.

Full Disclosure: I am long NCSM, MITK

I wrote an in-depth article on enhanced geothermal technology the other week. It’s what Fervo Energy (FRVO) is pioneering at scale.

I removed the paywall on it because I covered a lot in it and believe you will find it to be insightful. We are very early in this industry. Also, my other Fervo Energy article got the most likes of any article I’ve ever done.

I pieced together a lot of academic research and many reputable sources in this one. I also removed the paywall because more health issues curtailed my usual stock screening recently. Here is the article,

https://stockpursuit.substack.com/p/powering-the-ai-boom-fervo-energy

I go into the technology, overall market and data center potential. The reason I see it being successful is simply because of what it can do for the grid shortfalls as a clean energy.

Enhanced Geothermal Systems or EGS resources covering Nevada and 5 adjoining states could generate up to 135 gigawatts of baseload power, enough to supply 10% of all current U.S. electricity demand.

The base case is just over 100 GW over coming years. That’s a lot. Geothermal currently supplies less than 1% of US electricity.

A peer-reviewed study published in Joule last June and analyzed by Princeton University finds even larger upside. Joule Journal is one of the most respected scientific, peer-reviewed open-access journals.

Joule projects 250+ GW of enhanced geothermal deployment by 2050 if costs continue falling, potentially making it the third most significant clean energy technology behind only solar and wind.

The most bullish scenario is 850 GW. Yes 850 GW by 2050. That’s more than the current grid size.

Critics of the cost projections point to the drilling factor. Drilling is about half of current geothermal costs. Fervo has interestingly reduced drilling times substantially at the Cape Station site already. Drilling is a valid concern on the deepest rocks. I’m bullish on technological innovation in drilling to get to target costs over the long-run. I see supply chain risk being a more immediate and bigger threat to EGS competitiveness.

Ormat ORA

Ormat is a great energy play along with the drillers I mention in the long article above. But, Ormat has only done one very small 1.7 MW sized add-on to their traditional geothermal EGS 13 years ago and are still working on a pure EGS pilot. They aren’t close to commercial scale EGS yet. Fervo is leading the way right now. Fervo already has a $7 bil EGS backlog and 100’s of MW online in the next couple years. Some people will compare the companies, but they are very different right now. Ormat is more so investing in EGS right now and not leading the way in scale.

Fervo Energy just opened for trading this afternoon and is trading in the $38’s.

If you missed my first article on the massive potential of geothermal to provide clean energy to the grid and data centers I recommend reading it for an in-depth view on the potential. I go deep into the industry costs and the market potential.

Company History

Tim Latimer (CEO) and Jack Norbeck (CTO) co-founded Fervo in 2017. They have backgrounds in oil & gas drilling engineering and reservoir physics to apply shale-era drilling techniques to geothermal. Before Fervo, Tim Latimer was a drilling engineer at BHP, one of the world’s largest mining and oil and gas companies.

Jack Norbeck PhD has impressive scientific credentials. He has a PhD in energy resource engineering from Stanford, was postdoctoral fellow at USGS Earthquake Science Center, focusing on earthquake hazard analysis. This is relevant to enhanced geothermal systems (EGS) induced seismicity risk management. He was also a research affiliate at Lawrence Berkeley National Lab.

At a New York Climate Week interview recently CEO Tim Latimer talked about the company beginnings. He said from 2017 to 2022, their biggest problem in getting investors was actually convincing them that the grid needed more electricity. We know that quickly changed with ChatGPT and LLMs in late 2022 and 2023. Tim called it that lucky moment, that many successful startups have. There has since been a rush for new, clean energy to expand the grid.

Here are the Fervo previous funding rounds and valuations below:

Pipeline

Fervo has a $7 billion sales pipeline. They have an agreement with hyperscaler Google Alphabet (GOOGL) for 3 GW. They also have deals with Shell for 31 MW for a 15 year deal and 320 MW with major utility Southern California Edison.

The Google Deal

Google officially became an equity investor in late 2025. They got a heck of a deal with Fervo considering how much potential their 256,000 acres of total land holds for power. They have atleast 42 GW of geothermal potential. Google has rights of first refusal over portions of the project pipeline, including over expansion capacity within contracted areas and certain near- and medium-term uncontracted capacity.

The agreement further restricts Fervo’s ability to accept investment from, or enter into financing arrangements with, a broad category of Google competitors.

Fervo is committed to the development of at least one GW of geothermal capacity to Google within two years and up to three GW over the term of the agreement. Google or Fervo may terminate the agreement entirely, if no definitive offtake agreement has been executed by March 19, 2028.

Together, these provisions give Google priority over the near-term development pipeline. The SEC S-1 says, the agreement is a non-binding agreement and does not obligate Google to purchase power from them.

Projects are moving along well. Fervo has 2.6 gigawatts in advanced development. They have over 38 gigawatts in early-stage development across ten “GeoClusters” as they call them or 50 MW modules where they have commissioned and received independent HIIP studies and are conducting feasibility activities to validate and confirm the path toward commercial development. The pipeline is looking very promising. See the full breakdown below:

They build in modular 50 MW Geoclusters which is good for streamlining financing. They expect to support learning curves by concentrating operations in multi-gigawatt GeoClusters. They believe that this approach will make cost-competitive EGS. They believe this solution is attractive to high credit-quality offtakers and will assist in catering to AI hyperscalers that require speed-to-power, gigawatt-scale energy access, and the 24/7 availability.

As of December 31, 2025, they have raised $320.6 million of project level capital, comprised of $175.0 million of project-level equity and $145.6 million of project-level debt. On March 6, 2026, they closed a $421.4 million project finance credit facility with a syndicate of nine lenders (the “Project Granite Facility”) for the first phase of Cape Station development. They have relationships with leading capital providers giving the flexibility to secure lower-cost, non-dilutive project-level financing, extending the runway of funds while accelerating deployment. They plan to diversify financing.

Current Financials

For full year 2025 they had revenue of $138,000 and a net loss of $57 million. The balance sheet is healthy near-term, however. Current ratio is 3.17 and they have $461 million in cash.

Immediate Potential Downsides

Even though the future for Fervo and the EGS industry overall looks incredibly bright there are some near-term negatives. The large upfront costs are not competitive with solar and gas yet. It’s on par with nuclear. Fervo is guiding $7,000/kW for the first 100 megawatts of their Cape Station commercial pilot, and energy systems Princeton PhD researcher Wilson Ricks on Linkedin is saying $5,500/kW for the next 400 megawatts of the project.

The costs have decreased substantially in a short amount of time and I see this trend continuing. However, there is a risk the pace in decreasing drilling times slows down and the overall cost trajectory slows.

I’m bullish on technology bringing costs down faster than expected as we are entering the age of AI assisted science. There was a recently published instance of GP-5.2 coming up with a science formula first ahead of the scientists. In February 2026, OpenAI published a preprint showing that GPT-5.2 itself had derived a novel result in theoretical physics specifically in quantum chromodynamics (QCD), the mathematical framework describing the strong nuclear force.

GPT-5.2 independently proved the formula in about 12 hours. Harvard and Cambridge verified it. Extremely well renowned theoretical physicist Nima Arkani-Hamed said he had been curious about these scattering processes for nearly 15 years.

There was FunSearch by Google DeepMind, published in Nature a couple years ago. It paired an LLM with an automated evaluator to solve the cap set problem that is a longstanding open question in extremal combinatorics. There have also been a handful of biology and chemistry breakthroughs. As industries start adopting AI Copilots that are being built by startups right now there are going to be more and more advances. I have a relative who is building an AI Copilot startup currently for the auto repair industry.

Drilling Is The Key

One of the biggest challenges Fervo and the industry faces is getting the cost of EGS down. Drilling is the major cost factor. It’s more challenging than oil and gas drilling. They must drill deeper and into much harder crystalline basement rock. The CEO Tim Latimer worked as a drilling engineer at BHP Billiton for three years, where he worked across complex drilling programs in the Permian Basin and Eagle Ford Basin. These are two of the most active shale oil and gas regions in the U.S. This gives me confidence in his ability to apply the best current and future technology.

The US has built a multi-decade cost advantage in shale oil and natural gas drilling. The US is the leader. Not even China can compete on cost.

Tim told a funny story at that Climate Week interview about an interaction he had with a drilling worker on a Fervo site who just started with them three days prior. He came from shale drilling. He asked them, “So how do you like working in geothermal?” They replied, “What’s geothermal?” That is how similar and transferable the drilling is.

Fervo Potential Downsides

I initially thought there might be an awareness factor with Fervo. The fact that they already have one of the country’s largest utilities Southern California Edison and Google speaks to how in-demand the energy is.

Given all the excitement in the market this year, I suspect I’m in a small minority of retail investors and possibly even institutions who have connected all of these dots with Fervo and the industry on the whole. On Twitter/X there is just me and a few others that have even mentioned the ticker symbol. Are the institutions aware? I highly suspect they are more aware but I don’t know what the appetite for the stock will be early on. The market cap is rich at $6 bil with paltry revenue so far.

Based on the fact they already have so many power purchase agreements I see them being successful in landing future business even if it is not data centers. My thesis for the stock outperforming is largely driven by them continuing with hyperscaler size contracts. Google’s golden handcuffs in the S-1 currently block any other hyperscalers from partnering with Fervo. It puts a lot of dependency on Alphabet’s capex alone as it is a big part of their pipeline.

A Breakthrough is Already Happening

There could be a potentially big breakthrough in drilling happening right now. MIT’s Plasma Science and Fusion Center developed millimeter-wave (MMW) drilling, which uses a surface-mounted gyrotron (a high-power microwave device) to beam energy waves down a waveguide and literally vaporize rock rather than grind through it.

The mother lode of geothermal energy is some 2 to 12 miles beneath the Earth’s surface where the rock is so hot that if water could be pumped to the area it would become supercritical, a steam-like phase that most people aren’t familiar with. Supercritical water, in turn, can carry some 5-10 times more energy than regular hot water, making it an extremely efficient energy source if it could be pumped above ground to turbines that could convert it into electricity.

Today we can’t access those resources. The number one problem is we can’t drill down far enough. The drills used by the oil and gas industries can’t withstand the challenging temperatures and pressures that are found miles down without becoming exponentially more expensive with depth.

Some of the current tech setbacks are power scaling and possibly wellbore stability. The current gyrotron needs to be replaced with one delivering 10x more power to drill commercially useful depths. This is in development but unproven at scale so far. It has been advancing fast though. Wellbore stability could be a factor as vaporizing rock leaves a vitrified (glass-like) bore. Whether this maintains structural integrity under the extreme pressures and temperatures at depth is still being evaluated.

Drilling Down To My Ending Thoughts

This is a very early emerging industry commercially. So, Fervo comes with that risk. I’m very confident in the cofounders. I’m very bullish on this industry and Fervo long-term simply due to energy demand and what they offer major utilities and hyperscalers.

Full Disclosure: I have no position currently in FRVO but am buying as soon as trading opens with a starter position

Grab a cup of coffee or tea. I’ve got an important one today. In this article I am going to present the case why enhanced geothermal power plants are an efficient, safe, clean and a cost-effective energy source for the grid and to power data centers.

Before you think to yourself, “I already know about geothermal and all the limitations.” Allow me to introduce you to modern, next-generation enhanced geothermal systems or EGS. This is a technology old in concept but very new in commercial deployment. It has about 3 years of proven commercial operation.

There will be two parts to this. The first part here will be about the technology, costs and serviceable near-term and long-term addressable market. The second article I will publish in a few days or less will be all about Fervo Energy (FRVO) and the highlights from their recent SEC S-1 filing.

The modern enhanced geothermal revolution began when companies like Fervo Energy realized that the oil and gas industry had solved enhanced geothermal’s hardest problems. Horizontal drilling, hydraulic fracturing and distributed fiber optic sensing were the game changers. I’ll go deeper into this compelling technology later on.

A Solution To The Problem

About three years ago I realized how significant AI was going to be in society and the economy. I brainstormed all the possible sources of energy that would be needed to power it, especially the clean energy. I realized the US was going to need all the energy it could get its hands on.

We’ve all heard for some time the grid and data centers will need more power than can be delivered with current trajectories. There are already major shortfalls delaying data center builds. Only 25 gigawatts (GW) of new data center capacity was added to the funnel in Q4 2025, half of Q3 additions. Further corroboration comes from CBRE saying in a February report about 5,995 megawatts (MW) of data center capacity was being built at the end of 2025, down from 6,350 MW in 2024.

Fortune reported in March 2026 that utilities simply "don't have either the grid capacity or the generating capacity to build it fast enough" to meet data center requests. It just takes longer to build the power infrastructure than the data centers themselves. Gartner predicts power shortages will restrict 40% of AI data centers by 2027.

Today there are only around 66 utility scale geothermal power plants that are operating in the U.S. They are providing less than 0.5% of total U.S. electricity generation.

The U.S. is the global leader in installed geothermal capacity. The current plants are almost entirely conventional hydrothermal plants. They rely on naturally occurring steam and hot water, not engineered rock fracturing enhanced geothermal provides. This is why geothermal growth has been modest to this point. There are zero enhanced geothermal plants at true commercial scale right now. That is about to change dramatically. The first large-scale commercial enhanced geothermal power plant in U.S. history is about to come online in about a month at 53 MW, then ramping to 500 MW and potentially 2 GW. Fervo Energy (FRVO) is building it. They have a $7 billion sales pipeline. They already have 658 megawatts of power purchase agreements, including a hyperscaler.”

The Future of Modern Geothermal

Fervo Energy (FRVO) has an upcoming IPO this month on Wednesday the 13th according to the site IPOScoop.com. Priced at $21-$24 a share at $1.25 billion. The IPO will value the company at $6.5 billion. The ticker will be FRVO. They announced in April on their website they filed the S-1 with the SEC for an IPO on the Nasdaq.

J.P. Morgan, BofA Securities, RBC Capital Markets, and Barclays are lead bookrunning managers.

Why am I so excited about Fervo Energy?

Fervo can offer data center developers modular, 24/7/365 clean power that is cost effective. They are building the biggest and most ambitious commercial enhanced geothermal system (EGS) project in the world.

Fervo’s first commercial project, Project Red in Nevada, has been actively powering Google’s data centers since 2023. Project Red is the longest-running and is the first ever use of horizontal drilling in an enhanced geothermal system. Project Red has surpassed 614 days of continuous operations, validating the long-term stability of the project and technology.

Fervo is a Houston-based enhanced geothermal energy developer founded in 2017 and backed by investors including Google, Breakthrough Energy Ventures, CPP Investments, and Mitsubishi Heavy Industries. Fervo is proving that enhanced geothermal can compete at utility scale.

Fervo Energy is currently building a geothermal power plant called Cape Station in Beaver County, Utah. It is going to be the largest next-generation geothermal development. It will deliver atleast 500 MW of clean energy. It will begin delivering electricity to the grid in 2026 and 100 MW by early ‘27. It is expected to be fully operational by 2028. They have power purchase agreements with Southern California Edison, Shell Energy, and several community government-run energy buyers. The full Cape Station development has received permitting approval to expand up to a very sizable 2 GW. The project will provide power to approximately 180,000 homes.

What is the Technology?

Advanced Geothermal Systems (AGSs) are deep, large, artificial closed loop circuits in which a working fluid is circulated and heated by sub-surface rocks through conductive heat transfer. They can theoretically be built anywhere. This makes them a strong candidate for future datacenter power.

Think of it like a giant underground heat exchanger. The Earth’s interior is extremely hot. Fervo drills two horizontal wells deep underground into hot, hard rock. Cold water is pumped down one well, flows through natural and engineered fractures in the hot rock, absorbs that heat, and comes back up the other well as superheated fluid. That hot fluid spins a turbine to generate electricity. It’s the same basic principle as a coal or nuclear plant, just using Earth’s heat instead of burning fuel.

What makes Fervo different from older geothermal is that it borrows techniques from the oil and gas industry, specifically horizontal drilling and fiber-optic sensing. Traditional geothermal only works in places with naturally occurring steam (like Iceland or Yellowstone).

See the new enhanced geothermal illustration below:

Fervo’s approach, called Enhanced Geothermal Systems (EGS), works almost anywhere with hot rocks, which is most of the planet. The fiber optics monitor the reservoir in real time, allowing engineers to optimize flow and catch problems early.

Traditional geothermal is just one-off vertical wells. Fervo Energy can access vast quantities of subsurface heat by drilling many horizontal wells from a single pad with a compact footprint, dramatically reducing land disturbance. You can see the conceptual difference in the image below.

This approach replicates the successful wellfield design used in the shale oil and gas revolution. However, unlike in shale, where operators typically target specific and sometimes narrow payzones. They can access progressively hotter rock the deeper they drill.

See the difference between conventional and enhanced below:

The Next Emerging Energy Industry

The convergence of AI-driven power demand, falling EGS costs, a proven workforce from oil and gas, and fresh capital make this an obvious industry on the verge of a coming boom.

Let’s start with the most conservative industry forecasts.

McKinsey estimates that next-generation geothermal has a market potential of 85–110 GW in the U.S. alone by 2050, with roughly 40 GW by 2035, making it a major component of the future grid.

Mordor Intelligence estimates the global installed geothermal base will grow at a 10.42% CAGR from 2026 to 2031, nearly doubling from 17.97 GW to 29.5 GW.

MIT reported in March that over recent years, an influx of private capital and shifting energy and environmental policies have driven renewed interest in expanding development of geothermal energy. It is growing in the United States, Indonesia, New Zealand, and Turkey.

Meta Platforms (META) backed enhanced geothermal company Sage Geosystems closed a $97 million Series B funding round this year, led by Ormat Technologies and Carbon Direct Capital.

Huge Near-term Upside Potential

The U.S. Geological Survey published an assessment in May 2025, titled “Enhanced Geothermal Systems Electric-Resource Assessment, Great Basin.” Its major finding is EGS resources in the Great Basin alone, covering Nevada and 5 adjoining states could generate up to 135 gigawatts of baseload power, enough to supply 10% of all current U.S. electricity demand!

Reuters and the EIA all independently confirmed these figures. For context, geothermal currently supplies less than 1% of U.S. electricity. This would be a 10x leap just from one region. Fervo is focused on this area.

Here is a map of it below:

Wait. It gets better.

A peer-reviewed study published in Joule last June and analyzed by Princeton University finds even more promise. Joule Journal is one of the most respected scientific, peer-reviewed open-access journals published by Cell Press that covers Energy Research.

Joule projects 250+ GW of enhanced geothermal deployment by 2050 if costs continue falling, potentially making it the third most significant clean energy technology behind only solar and wind.

The study goes on to say installed EGS capacity indicate robust growth in the 2030s at low and baseline costs in all policy scenarios, with deployments being limited by build rate constraints in early periods not cost constraints. This early growth drives reductions in EGS costs, primarily in the less-mature wellfield, enabling additional deployments that reduce costs further in turn.

They see a scenario of total installed EGS capacity in 2050 exceeding 250 GW in all scenarios and reaching more than 850 GW in the low EGS cost, zero-emissions policy scenario. 850 GW is more than the current entire US power grid!

850 GIGAWATT’s!!

Such extensive deployment is enabled by substantial learning-driven cost reductions, with surface power plant costs reduced by roughly 50%.

The reason it is so much more bullish is because the paper directly builds on and extends the earlier NREL Enhanced Geothermal Shot Analysis (2022), which projected 60 GW by 2050, and the DOE's Commercial Liftoff report targeting 90 GW by 2050. However, the Princeton paper explicitly models nationwide learning curves and cost feedback loops, which the earlier studies did not fully account for.

The learning curve and feedback loops reflect learning-by-doing throughout the entire supply chain. Drilling crews get faster, rig designs improve, supply chains optimize, engineering firms accumulate institutional knowledge, and financing becomes cheaper as the technology de-risks.

Opportunity In Old Oil and Gas Wells

There are millions of abandoned oil and gas wells throughout the country. Over 500,000 of the disused wells are estimated to be suitable for producing geothermal energy, potentially generating up to 13 GW of clean energy.

Drilling on The Periphery

Fervo is teaming up with Baker Hughes (BKR), who will design and supply equipment for five Organic Rankine Cycle power plants at the Cape Station Phase II.

Periphery investments around this coming geothermal push could be Devon Energy (DVN), who has already invested in Fervo and Schlumberger (SLB).

Schlumberger (SLB) actually has a geothermal subsidiary called GeothermX and has been involved in 80% of the world’s geothermal projects.

Overall, Ormat (ORA) continues to lead in commercial geothermal development, with 25 projects under development. They just recently announced a partnership with Schlumberger SLB. They were the first mover in enhanced geothermal in 2013 but it was just a very small 1.7 MW addition to an existing project. Fervo is the leader in EGS scale. Ormat has consistently grown revenue over recent years and the stock is up 62% over the last year.

What About The Earthquake Concern?

Fervo’s specific design significantly reduces the risk compared to older EGS methods. Let’s get into it and look at some studies that show very low risks.

• EGS involves injecting fluid into rock at pressure, which can cause small seismic events. A 2017 EGS project in Pohang, South Korea triggered a magnitude 5.5 earthquake and was shut down. This is the incident most critics point to.

• Stanford researchers who studied the Pohang failure concluded the operators ignored warning signs and injected fluid too close to a pre-existing fault under stress. It was a site selection and monitoring failure, not an inherent flaw in EGS itself.

• Fervo uses a different design. Fervo uses a closed-loop horizontal well system. Fluid is recirculated rather than injected at high pressure into open rock, which produces way smaller pressure changes than the Pohang design. This is the key architectural distinction.

• Lawrence Berkeley National Laboratory scientists told Power Magazine the method is “relatively safe” when pre-injection stress tests are performed to understand fault geometry first. The Geothermal Energy Association concluded: “EGS-induced seismicity need not pose a threat if site selection is carried out properly”

• More interestingly, a 2021 Caltech study found that geothermal production at California’s Coso field actually de-stressed the surrounding rock over 30 years, making the region LESS prone to large earthquakes. The opposite of the feared outcome.

Perfect Timing

Fervo has said its projects can direct 24/7 carbon-free electricity not only to utilities, but to behind-the-meter partners including direct air capture, hydrogen production, and other energy-intensive industries.

● Each project will consist of modular, parallel units of multiple 50 MW power plants.

● Projects can be constructed in just 18 months, meeting data centers’ need for speed.

This type of clean power and timeline is EXACTLY what the grid and hyperscalers need right now

According to a USGS report in the Fervo white paper, there is enough enhanced geothermal resource potential to support a 10 GW hyperscale data center cluster in at least 22 different U.S. states, not just the Great Basin.

Fervo has 595,000 acres of lease positions across California, Colorado, Idaho, Nevada, New Mexico, Utah and Washington as of December 31, 2025. Fervo's lease positions are aligned with data center geographic preferences.

Below is a map of current geothermal attractiveness and Fervo operations and leases from their white paper.

Capital expenditures for Cape Station are budgeted at $6,000/kW, which is near the US DOE 2030 enhanced geothermal liftoff target of $5,000/kW. Fervo’s project is a decade ahead of the National Renewable Energy Laboratory Technology case.

According to The Center on Global Energy Policy at Columbia University website, with help from the tax incentives in the Inflation Reduction Act, the project will be profitable from the start. Rystad Energy also expects Cape Station 1 to be profitable if it meets the right combination of lower discount rates and favorable power purchase agreements (PPA) with its offtakers.

How Do EGS Costs Compare?

Electricity accounts for a large part of data center operational costs, making data centers very cost sensitive to the price of electricity.

Enhanced geothermal offers an opportunity to reduce costs relative to other power options. It is already cost competitive with nuclear and traditional geothermal power. Current cost trajectories show that enhanced geothermal will be cost competitive with baseload natural gas before 2030.

According to Lazard, enhanced geothermal will be half the cost of nuclear on proven geothermal resources. See below:

Mckinsey thinks geothermal costs could drop to $45 to $65 per megawatt-hour for facilities over the next decade. Local microeconomics determine much of the project’s viability given variation in geothermal project elements (for example, temperature gradient) and competition like gas cost. The US Department of Energy sees similar costs.

The US Department of Energy’s Enhanced Geothermal Shot targets EGS costs of $45/MWh by 2035 without tax credits aiming to make geothermal broadly competitive and even on par with utility-scale solar and wind with storage.

These costs are possible because enhanced geothermal is adopting the newest breakthroughs in oil and gas drilling to drive costs down.

These cost improvements will likely be driven by four factors: reduced drilling and hydraulic fracturing cost, improved well productivity, optimized exploration spend through better mapping and characterization of geological resources, and scaled supply chains for power plant equipment resulting in lower surface capital expenditures.

Fervo has reduced drilling times by approximately 75% from 2022 to 2025 and lowering per-foot drilling costs by approximately 70% over the same period.

You can see Fervo’s cost per foot and days spent drilling trend below from their SEC filing:

They use data analytics and proprietary AI-based modeling to better predict operational conditions and accelerate design optimization.

Comparing costs to solar and wind is somewhat misleading because solar and wind are not 24/7 like geothermal. When taking reliability into account, geothermal is more similar to nuclear or coal and gas-fired power plants.

The table below shows how costs are decreasing even very early on substantiating the industry low-cost projections…

Geothermal offers low operating costs and high capacity factors of >90%.

Capacity factor measures how much of the time a power plant actually runs at full output. Geothermal's >90% capacity factor means it runs nearly 24/7/365. The Earth's heat doesn't stop at night or on cloudy days. This is critical because it eliminates the need for expensive battery storage or backup generation that solar or wind require.

The other good news for geothermal is tax credits for utility scale geothermal was untouched by Trumps Big Beautiful Bill.

The Data Center Cooling Situation

Data center chip cooling comes with benefits though they are a little nuanced. Traditional data center cooling uses electricity to cool the facility. Data center power density per rack is surging. The heat generated in the data center floor space has increased dramatically. This forced new AI builds into liquid cooling, which requires significantly more water. Even though the newest Nvidia chips are incredibly more water efficient geothermal has an overall edge.

EGS can in theory use absorption chillers. Instead of electricity, it runs on heat as its energy input. Geothermal wells naturally produce hot water or steam as a byproduct of power generation. Rather than dumping that waste heat, it can be piped directly into an absorption chiller to cool the data center essentially for free. Think of it like using the exhaust heat from your car engine to run the air conditioning instead of drawing extra power from the engine.

Fervo’s future development pipeline will only use dry cooling technology as stated on the website. The entire operation uses the deep underground saltwater and zero freshwater at the surface for a water-neutral solution. This also eliminates the cost of water treatment that must be in place for wet evaporative cooling towers for data centers. There are higher upfront capital costs for dry cooling but lower operational costs. In the extremely hot, dry states of the American West there is a slight power output efficiency penalty. Fervo has not disclosed any power output penalty data.

My research through multiple academic sources found the power output penalty to be on average 3-6% power reduction annually. The high end can go to 10%. It is an acceptable tradeoff in water-stressed regions like the American West though. The good news for Cape Station is it is in Utah. Utah has cool night-time temperatures, so I see it staying in the 3-6% range.

Geothermal doesn't automatically solve the chip-level cooling problem. EGS does offer potential for waste heat reuse from absorption chillers, offsetting electricity otherwise spent on cooling. That’s big. Air-cooled dry towers provide lower PUE (Power Usage Effectiveness), which is when waste heat offsets cooling loads so there is less total power is spent per unit of compute.

Final Thoughts

After drilling down into the details I’m very confident in the long-term growth and investment opportunity of the EGS industry here in the US and globally. My research found Germany, Japan and Indonesia as countries with strong near-term strong growth potential also. I’m going to continue to keep my eye on the industry and any new IPO’s that might pop up.

Be on the lookout for my next article, specifically on Fervo Energy coming in a few days or so.

Full Disclosure: I am long ORA, DVN and plan on buying FRVO when it opens for trading

Sources:

1. Pathways to national-scale adoption of enhanced geothermal power through experience-driven cost reductions -Princeton University

2. https://zero.lab.princeton.edu/wp-content/uploads/2025/06/Ricks-Jenkins-2025-Pathways-to-national-scale-adoption-of-enhanced-geothermal-Joule.pdf

3. Enhanced Geothermal Systems Electric-Resource Assessment for the Great Basin, Southwestern United States -USGS.gov

4. Utilization of Oil and Gas Wells for Geothermal Applications Hakki Aydin, Seher Yüksel, Cihan Topuz Zorlu Enerji, Denizli, Turkiye

5. Geothermal's Rise a Hot Topic Worldwide, PowerMag April 1 ‘26

6. https://www.energypolicy.columbia.edu/publications/the-potential-contribution-of-enhanced-geothermal-systems-to-future-power-supply-roundtable-summary/

7. https://fervoenergy.com/wp-content/uploads/2025/07/Fervo_UIPA_The-Enhanced-Geothermal-Data-Center-Corridor_July-2025.pdf

8. Fervo’s SEC S-1 https://www.sec.gov/Archives/edgar/data/1853868/000162828026029515/fervoenergy-sx1a.htm

9. https://www.rystadenergy.com/insights/fervo-energy-secures-dollar421-million-in-debt-boosting-its-ipo-prospects

-Mark

That basket of rare earths had really good returns. MP Materials and NioCorp Developments were 3 baggers in 2025. Of course, not every stock I like here or from that basket did great. Northern Dynasty Minerals from that list had the Pebble Mine denied early in the year. I see the investments I’m covering here today as a longer-term investment.

Today, I want to touch on ways to get exposure to a couple of the leading AI labs OpenAI and Anthropic who have been growing extremely fast. Anthropic has grown revenue from $100 million in 2024 to a $14 billion run-rate this year. Their Claude Code coding assistant doubled business sales in January alone this year. OpenAI is also growing extremely fast with revenue of $3.7 bil in 2024. They will do atleast $26 bil this year.

Suro Capital (SSSS) is invested in OpenAI and the ARK Venture Fund (ARKVX) is invested in Anthropic, Perplexity AI and even SpaceX.

Suro Capital is a closed-end fund BDC that IPO’d in 2011 and trades on the Nasdaq. It invests in high-growth, venture-backed private companies. The funds focus is to give public market investors access to rapidly growing, late-stage private companies before they go public or are bought.

Suro Capital has 20% of the funds allocation in the ARK Deep Ventures Fund. It’s sole purpose is to invest in OpenAI. Every time there has been a new funding round for OpenAI and the valuation increases Suro Capitals stock keeps pushing higher.

Here are Suro Capitals holdings below.

ARK Venture Fund

The fund has a lot of holdings other than the AI labs. It also has Perplexity AI which I use a lot. It holds Databricks, Neuralink, Replit, Lambda and many more. This is the ARK Venture Fund full portfolio holdings. It has some public companies too.

The ARK Venture fund is available with some brokers from research I did awhile back. Non of my brokers have it.

Full disclosure: I am long SSSS

It’s been a while since I first started digging into these deep value plays, and the journey has been anything but dull. Today’s final roundup is all about revisiting those ideas, seeing what’s changed, and why I still think they have room to run.

It started here with these stocks I previously covered. The idea is the same with this today. I am going to go over the key things I still like about these previously covered stocks. I found these when they were true net-net’s or sub net tangible asset value (NTAV). Let’s get to the stocks.

NCS Multistage Holdings (NCSM)

NCS Multistage Holdings (NCSM) is an oil and gas equipment services company I originally found in early 2025. They had a terrible 2022 and 2023. It beat the stock down so low but when I found it things were turning around financially. Trailing twelve month (TTM) return on equity was 40%. They had a healthy bottom line with positive free cash flow. The stock was just 11x TTM free cash flow and trading for less than net tangible asset value (NTAV)!

NCS Multistage stock has had an incredible year of relative strength up 90% year to date. It is now up 141% since my original write-up on it. Here is the last time I touched on NCSM. My value thesis on it has been the upside from the administration’s stance on domestic production and natural gas demand as a part of the electrification expansion.

I was right about the natural gas prices. I didn’t expect the catalyst to come from geopolitics, but that’s the market for you! It’s playing out more quickly currently with the Middle East conflict boosting oil and natural gas prices.

NCS Multistage is still hitting it out of the park. They reported Q4 earnings in March with revenue growing in all markets up 13% for the full year 2025 beating guidance. Operating income and free cash flow doubled YoY. Some of this is attributed to the ResMetrics they recently bought for around $7 million.

ResMetrics does chemical tracer diagnostics services to validate reservoir strategies, enhance fracture designs, assess inter‑well connectivity, and optimize recovery programs. Resmetrics was a good purchase for them and will help growth. It’s a fast-growing segment with EBITDA margin of over 30%.

Here’s where things get interesting. For the full year 2025 NCS Multistage had return on equity of 16%. Shareholder equity grew 23% year over year to year-end 2025. The balance sheet is impeccable, with a debt-to-equity ratio of 0.26. They have $36 mil in cash, which is the highest it has been in a few years atleast.

Still a Good Value

The amazing thing about NCSM is how cheap it is still after this stock run. It’s trading for just 10x TTM free cash flow at $75 a share. One of the things I have liked about it is it’s still a small company. The market cap is just $190 million and there still isn’t much analyst coverage. I believe there is just one analyst covering the company.

SEER (SEER)

Seer is another one of those proteomics platform company’s trading below net cash. The first one I found and wrote up way back was Somalogic which was shortly after acquired for a premium by Standard BioTools (LAB). I realized I was onto something after that and I kept looking at biotech below net cash. My original thesis was simply being the newest breakthrough AI models would be useful for these companies.

That lead to Seer, which I found below net cash in 2024. I did a Seer short follow-up write-up here a couple months ago. In the follow-up I touch on another stock I found in the same industry with even better technology.

Well guess what? Now Seer got a buyout offer a week ago from Bradley L. Radoff and Michael Torok with the Radoff-JEC Group. They are offering $2.25 in cash which is still 12% above the last closing price of the stock at $2.00 a share Friday. I don’t like the offer and I hope it’s rejected. Net cash per share is over $3.00.

Quantum SI (QSI)

QSI is the other protein sequencing company I found below net cash at $1.18 a share in early December of 2024. Here is the original write-up on it. About a month later the stock was over $5.00 a share. I think it simply got caught up by mistake in the “quantum” computing hype cycle that was in full force that winter. It was just the company name that brought a lot of retail investors into the stock. I still like the stock in the deep value biotech portfolio sleeve.

Lucyd (LUCY)

Lucyd (LUCY) formerly Innovative Eyewear is a stock I like for the emerging industrial smart glasses thematic exposure, strong revenue growth and solid balance sheet. The global smart glasses market is growing at a 25-30% CAGR. The most addressable market is the industrial/workplace smart glasses and their Lucyd Armor fit in well here. I like their growth strategy of penetrating less competitive international markets. Revenue for the full year 2025 grew 63%.

Lucyd is still a net-net with NCAV of $8.4 mil and a current market cap with the stock at $1.06 of $6.7 mil. The balance sheet is in great shape, however with a current ratio of 9.00

Lucyd definitely comes with cash burn risks, being that they are not profitable yet and they face better capitalized competition. So, it’s not worth a large core position to me personally at the moment but I like the theme exposure and sales growth. To my knowledge big tech is more focused on enterprise and not necessarily industrial workplace “safety” glasses that Lucyd’s niche is in. Meta the smart glasses leader by far is big-time focused on the consumer market currently.

Here is my full in-depth write-up on Lucyd (LUCY)

Cardio Diagnostics (CDIO)

Early in the year Cardio Diagnostics got a contract with Dr. Lal Pathlabs in India that is a network of 290+ clinical labs and 300 MD pathologists. It’s their first contract in India. There is not a lot to update on for CDIO today I didn’t cover in the March update. They have tests that are ready to start selling and the addressable market is huge. Here is my most recent article on them from last month.

Final Thoughts

Each of these companies started as a balance sheet curiosity and I still find them worthy of a diversified deep value portfolio. I put a lot of thought into every stock I write about, and due to my very competitive nature, I take the bad stock picks a little harder than I should sometimes. I messed up on Carparts.com (PRTS). This stock has been awful! It’s the nature of deep value though.

PRTS is also a reminder that a diversified portfolio is the only way to go in deep value. A lot of stocks below working capital are just not going to perform or even become cigar-butt flips. I truly hope you got something from this article, and I’m excited to be able to keep sharing my best ideas.

Full disclosure: I am long NCSM, SEER, QSI, LUCY, CDIO

Investors have passed over Plug Power (PLUG) for many years and rightfully so. They have had poor financial performance and they heavily diluted shareholders. This makes it my favorite contrarian investment at the moment because things are changing. The crux of the thesis here is the thematic and how Plug fits into the rapidly growing electrification theme. I see the global energy demand and their sales being a strong crutch to lead the way to improved financials overall. In this piece today I will highlight the recent quarterly conference call and Reddit CEO AMA Q&A today here.

New Plug Power (PLUG) CEO Jose Luis Crespo did a Q&A today on Reddit. I really like the direction he is taking the company following longtime CEO Andy Marsh’s departure. Andy is now Chairman of the Board. The new CEO is saying they are working to get away from dilution and toward profitability. I wrote some on PLUG here in this recent article and here is my recent deep dive on Plug Power.

In early April of this year, Plug was awarded a contract to supply a 275 MW GenEco PEM electrolyzer system for Hy2gen Canada's "Courant" project in Baie-Comeau, Québec. This is one of its largest electrolyzer awards ever. I see the electolyzers as a big growth driver going forward. It’s their secret weapon so to speak.

The basics of the electrolyzers are they split water into hydrogen using electricity. The output is pure hydrogen gas, with oxygen released as a harmless byproduct. The hydrogen produced can then be stored, transported, or used as fuel for forklifts, vehicles, industrial processes, or power generation. They currently work the best cost-wise with solar/wind. The cost curve is falling fast to parity with other energy sources. There was mention in the Reddit AMA of tech breakthrough that will reduce costs.

There have been some exciting breakthroughs recently across the electrolyzer space:

VSparticle & Plug Power: Iridium Reduction

Plug has been collaborating with Dutch startup VSparticle, which achieved a 90% reduction in iridium usage through a nanoporous catalyst coating. Iridium is a rare, expensive metal that’s one of the biggest cost drivers in PEM electrolyzers. Multiple top-tier manufacturers have scheduled commercial-scale testing programs for 2026 using this technology.

Last Quarters Conference Call Highlights

In Plug Power’s last conference call the CEO Crespo said,

“2026 will be about sales growth and the target of achieving positive EBITDAs in Q4 2026. 2025 had 30% revenue growth and though margins aren’t good they improved 125 points sequentially last quarter to positive.

Then towards positive operating income in 2027 and full profitability in 2028.

I and some other PLUG bulls see their electrolyzer business as a real underappreciated future growth driver. They have a 5 GW preliminary agreement with Allied Green Ammonia and talked about a $8 bil sales funnel.

They had good progress here on margins putting execution where his mouth is.

EPS for Q4 2025 was -$0.63 compared to EPS of -$1.48 for Q4 2024. If we exclude the unusual charges in each period, adjusted EPS for Q4 2025 was -$0.06 versus adjusted EPS for Q4 2024 of -$0.29.

CEO Luis said, We’re working with all of our main customers, pedestal customers, like Amazon and Walmart, making sure that they can extract as much value of the technology as possible.

One of the things that we are seeing, I think I mentioned that before, is that many of our customers are seeing the value of the utility advantages of using fuel cells. For many of our customers, they need between 1 MW and 2 MW to power batteries, if they use batteries in their distribution centers.

When you use fuel cells, you open up that capacity for other uses or actually just, you know, to be able to reduce consumption and connection to the grid.

Below is a summary of the Reddit Q&A today

Financial Goals

The company’s Project Quantum Leap cost-reduction initiative already achieved its first 2025 milestone: gross margin positivity in Q4 2025. The 2026 goal is EBITDAS positivity in Q4 2026, with focus on scaling revenue in material handling, electrolyzers, and hydrogen production.

Capital Strategy and Dilution

Plug’s past dilution was necessary to fund a first of its kind, vertically integrated hydrogen platform. Going forward, the company is prioritizing non-dilutive capital strategies, improving cash generation, and reducing reliance on equity issuances to create shareholder value.

Amazon & Walmart Growth

Business with both Amazon and Walmart is growing again in 2026, driven by expansion needs post-pandemic and the reinstatement of the Investment Tax Credit in January 2026. The primary growth driver with these customers is expected to be material handling.

Gigafactory & Manufacturing Capacity

An interesting thing he wrote was,

“We are also looking at ways that our electrolyzers can contribute to provide grid services as a dynamic load on the grid with the capacity to store power when it is low cost and generate power through fuel cells when it is higher cost.”

Plug’s gigafactory can produce over 2GW of PEM electrolyzer stacks per year, and capacity can be scaled up quickly with minimal additional capital investment a key differentiator for gigawatt-scale project customers.

European Projects & AGA

• The 100MW GALP project has been installed and will begin commissioning in fall 2026, set to be one of the largest PEM electrolyzer projects in the world.

• The Iberdrola/BP 25MW plant in Spain is currently being commissioned.

• Allied Green Ammonia (AGA) projects in Australia and Uzbekistan represent a combined 5GW opportunity; the Uzbek project recently secured a government tax deal as a positive step toward Final Investment Decision.

AI Data Centers

Plug signed an agreement with Stream Data Centers expected to generate $132 million, part of a broader $275 million strategic infrastructure optimization initiative. Long-term, hydrogen and fuel cells are viewed as a power source for data center demand.

Electrolyzer Funnel

Plug has a well-qualified 8GW electrolyzer funnel, though the total funnel is even larger. Projects advance through stages based on customer readiness, financing, and policy alignment.

Grid Demand Reduction

Plug’s material handling fuel cell solutions remove approximately 2MW per distribution center from the grid. Across all deployed sites, the company estimates it has removed roughly half a GW of grid demand. Future plans include using electrolyzers as dynamic grid loads, storing cheap power and regenerating it via fuel cells during peak pricing.

NASA & Aerospace

Plug announced its first hydrogen supply agreement with NASA in 2024 and views aerospace — including potential lunar hydrogen production — as an exciting long-term opportunity.

Georgia Plant Expansion

The Georgia United States hydrogen production plant has capacity to expand by an additional 15 tons per day, which will be executed based on customer and market demand signals.

Carlton Power (UK)

The 55MW Carlton Power project in the UK continues to move forward, with a further update expected soon.

Full disclosure: I am long PLUG shares and call options

Acacia Research (ACTG) reported their fourth quarter and full 2025 results in March. It was a solid year and there has been a lot of improvement from where they were in my first article on them almost two years ago. I did another article here on them with a back of the envelope sum of parts valuation. If you want to get familiar with the company, I suggest you check out those previous articles.

ACTG has had relative strength this year and is up 33% year to date, and up 49% over the past year. The Benchmark oil and gas segment to me is one of the best things currently going for them with the rising oil and natural gas prices. Benchmark grew revenue a cool 30% for full year ‘25 vs ‘24 on record production. Several non-operating Benchmark projects came online in Q4. The work on the Benchmark Cherokee project is starting to pay off as it is coming online.

The company’s market cap is $482 mil with the stock at $5.00. Cash and equivalents are $3.52 a share. The stock is trading at a 16 PE TTM and 8x FCF.

For full 2025,

• Total revenue grew 133% year over year (YoY)

• Adjusted net income of $29.2 million or $0.30 diluted EPS.

• Free cash flow for the year was $59 mil or $0.61 cents per share.

Below is the revenue breakdown by segment

Energy Moving Along

In December 2025, Benchmark spud its first Cherokee well which is expected to be completed and producing in Q1 of this year. Benchmark has benefited from much higher natural gas prices in 2025. Natural gas sales are up 98% for 2025 YoY. I wrote about in the past how I saw that being a very possible catalyst for the segment.

Their average price for oil in 2025 was $63 a barrel. With crude oil over $100 now Benchmark is poised for some serious sales growth over coming quarters.

Q4 Conference Call Highlights

CEO MJ McNulty talked about how much value has been created since they took over. They said, “We've extracted $187 million from our valuable IP portfolio, have monetized most of our legacy assets, and have kept parent expenses relatively flat even as the organization has scaled.”

When the CEO took over at the end of 2022 the company had $350 mil in cash and they now currently still have $340 mil in cash. The strides the business has made is pretty impressive.

Considering the recent Deflecto purchase and all the businesses growing free cash flow, they go on to say they “used a combination of approximately $10 million of cash and $92 million of non-recourse subsidiary-level debt to add approximately $36 million of durable operated segment EBITDA, which now has nicely eclipsed our parent costs.”

In the call they talk about green shoots in Deflecto’s Class 8 orders in trucking. They are seeing year-over-year improvement over the last three months, with December through February up 23%, 25%, and 156% respectively, after 11 straight months of year-over-year declines.

Improvement on tariffs are poised to help Deflecto earnings. Tariffs from products imported from China have moved from a 20% tariff to a 10% tariff, and products imported from Canada have moved from a 25% tariff to a 10% tariff.

CEO MJ said Wifi-6 which is the majority of their IP patent portfolio hasn’t been impacted by AI. I don’t see that happening either as AI is being integrated into wireless networks.

There wasn’t any talk on analyst coverage as there was in a previous call. I have only been able to find one analyst on the company right now. It remains undercovered.

There was a question about a share buyback or potential buyback. There wasn’t a definitive answer on yes or no.

Final Thoughts

The stock is still cheap despite all the progress they have been making. I especially see it cheap after the rise in oil and natural gas recently.

Full Disclosure: I’m long ACTG shares

I have been thinking about what it might mean about the US stock market right now if I am not seeing quality US net-nets/sub NTAV. It has been quite some time since I found Fuel Cell (FCEL) and Lucy (LUCY). Perhaps it means we are at an inflection point. Maybe the valuations are getting stretched even in small and micro-caps. Maybe?

Coffee Holding Co. (JVA) a deep value company I have been covering for some time is having a great year. They had a good quarter this month and the stock is up 17% YTD.

The past couple years I was able to find good businesses even below net cash. Many of the stocks I’ve covered have been bought out like FONR recently. This is just an observation on the possibility of the overall market being stretched on valuation. The neat thing about being willing to venture into lower market caps is value shows up in the bull markets too. I’m sure some more good, really cheap stocks will pop up soon.

In the meantime, you are probably asking what do I see in a stock like ELVA in the lithium-ion battery industry?

Big picture, I see the AI boom continuing to drive the electrification thematic for some time.

Some of the key points from an investment perspective on Electrovaya that make it a highly compelling stock are:

• They have a patented ceramic separator moat

• Their batteries have an industry leading safety record

• They have industry leading battery life vs competitors

• They have built a revenue base in high-margin industrial sectors in Fortune 100/500

• They just recently transitioned from burning cash to positive cash from operations and net profitability

• Their solid-state battery technology along with new verticals are a catalyst for growth

Electrovaya (ELVA) is a lithium-ion battery manufacturer based in Mississauga, ON Canada. Electrovaya's battery systems are used in material handling electric vehicles at large-scale distribution centers and warehouses at Fortune 100 and Fortune 500 companies. They have a patented ceramic separator technology that separates them from the competition.

They are building a manufacturing footprint in the U.S. and expanding into high-margin sectors like autonomous robotics and data centers. The market cap is $350 million.

Electrovaya History

The company was founded in 1996 by Dr. Sankar Das Rajshekar DasGupta and physicist James Jacobs. His son Dr. Rajshekar DasGupta joined Electrovaya in 2009 after completing his doctorate at the University of Cambridge. He worked in several different roles across research, engineering, and operations before officially succeeding his father as CEO in May 2022.

Rajshekar DasGupta’s educational background is very impressive. Rajshekar holds a Bachelor of Engineering in Materials Science from Imperial College London. After that he went to the Massachusetts Institute of Technology (MIT) from 2004 to 2005.​ He then got a PhD in Materials Science at the University of Cambridge from 2005 to 2008. During his doctoral research at Cambridge, Dr. DasGupta focused on lithium-ion batteries.

Industry Growth

S&P Global and Grandview project the lithium-ion battery market to grow at a CAGR of 21-22% through 2030. Mckinsey & Company has projected 30% CAGR. Energy storage is the fastest growing application growing 24%.

Addressable Markets

They have a roughly $113 billion addressable market. See the image below.

They currently have Fortune 100/500 customers, global OEMs, and high-growth logistics operators across the U.S., Canada, Japan and Australia. They sell to Walmart, Target, Unilever, Mondelez, 3M etc. Some of the companies are below.

They are targeting new verticals. These expansions use their proprietary “Infinity” battery technology, which is valued in these heavy-duty sectors for its high cycle life, safety, and ability to handle continuous operation.

What else is going on….

Read more

I was running a deep value screen for balance sheet strength, good sales growth, recent earnings surprise and came across Electrovaya (ELVA). It's a new one to me in the lithium-ion battery industry.

In 2025, Electrovaya grew sales 43% YoY (year over year) and had positive adjusted EBITDA and net income. Last quarters sales grew 39% YoY and they were net profitable $0.02 vs $(0.01) YoY. Gross margin expanded a little too and they have had positive cash flow from operations the last two quarters to boot. They had the eleventh consecutive quarter of positive adjusted EBITDA. The trend of net profitability is set to continue.

What makes this especially compelling is the earnings trajectory. EPS is forecasted at $.15 this year growing 66% YoY. 2025 EPS was $.09 per share vs $(0.04) in 2024. Next years EPS is forecast at $.32 for over 100% growth YoY.

The stock is trading 55x this years EPS forecast and just 25x next years earnings. For a growth stock this is growth at a reasonable price. Especially if sales accelerate.

Their batteries have the highest energy densities of batteries used in the material handling industry. The higher energy density allows industrial vehicles to operate longer between charges, maximizing operational uptime.

Their focus has been on the industrial and transportation markets. Material-handling electric vehicle battery sales have been the large bulk of sales. They went after the material handling sector first because they can afford the capex.

They’ve deployed over 10,000 battery systems in use at some of the world’s largest companies’ distribution center networks.

They are diversifying into other segments like grid connected and behind-the-meter energy storage too. I’m intrigued by the potential for some accelerated revenue growth as they diversify into other industries and expand production into new verticals as planned. They are expanding manufacturing capacity in Jamestown, NY.

They are making next-generation 800V DC energy storage solutions targeting robotics and data center infrastructure.

I’m super bullish on the electrification and energy storage thematic over the long-term. So, this company checks multiple boxes for me on the quantitative and qualitative side even not being a net-net.

In a perfect market for new positions there are lots of deep values (sub NCAV or NTAV). I just haven’t been seeing them in the current market. When I find them I will always share them. In the meantime, I will share my favorite ideas as they come about.

I’m beginning to do some research on Electrovaya (ELVA). This is just a brief initial post to let you know I’m working on this one now. I will put up a full write-up on it soon.

Thanks for your support,

Mark

Full Disclosure: Currently no position in ELVA

• In January Cardio Diagnostics announced the Centers for Medicare and Medicaid Services (CMS) is paying $854 for both the Epi+Gen CHD™ and PrecisionCHD™ tests. This is more than last years preliminary estimates of $350 for Epi+Gen CHD™ and $684.76 for PrecisionCHD™.

• The company partnered with Dr. Lal PathLabs in India who have 290 clinical laboratories and 300 MD pathologists who will be using the PrecisionCHD™ tests.

• There is new data from a study titled "DNA Methylation Strongly Predicts Level of Coronary Artery Obstruction and Ischemia with No Obstructive Coronary Artery Spectrum Presentations in Those with Acute Coronary Syndrome."

  The findings build on the previous data in the Journal of the American Heart Association validating PrecisionCHD’s ability to sensitively and specifically detect coronary heart disease.

Highlights From The February Investor Call

In the beginning of the call, the chairman essentially proposed the question people ask when they discover the company. If there is real value in the test where is the revenue? He goes on to talk about how it’s a long process and uses Cologuard an epigenetic test, that was launched in 2014 and wasn’t bought by Abbott Labs until 2025. I see Cardio Diagnostics value being realized much faster due to the advances in AI the last few years and the superior nature of AI combined with medicine.

The PrecisionCHD test shows higher sensitivity and specificity at detecting coroanary heart disease than an exercise stress treadmill.

They have developed the first and only commercial solutions using epigenetics and AI for cardiovascular disease prevention and early detection.

Surprising to me the CEO mentioned genetics is only 20% of cardiovascular risk with it mainly being epigenetic. See below

This role of genetics is the consensus among major health organizations like the CDC and WHO.

They have a proprietary AI algorithm that identifies and integrates each patients unique biomarkers. The lab testing was built over 14 years and can be expanded upon.

The CEO says their tests have a cost savings of $42,000 per quality adjusted life year. 146 million Americans are elligible for their EPI+ test. 60 million Americans are eligible for the Precision CHD test. They estimate $113 million in cost savings to insurers and employers in the first year for the Precision CHD test.

It’s not a one and done test. The tests can be repeated over time.

The CEO says they are seeing growth in their sales pipeline and interest in the tests.

With the stock being up around 300%+ the past month I expect an offering.

I continue to like CDIO based on the thematic and possibly large upside over time or a buyout. I went into some speculation on a buyout in the write-up linked up top.

Full Disclosure: I am long CDIO shares

I’ve covered a lot of companies below net current assets and net tangible assets, in a variety of industries here over the past couple years. Today I want to go over the ones I still see as the best values.

I'm going to share the core reasons I still like the stocks and the main drivers of upside I see in each. This is part one of a two-part article. I’m going to break this one up into a couple articles as there are about a dozen or so stocks in total.

For the most part, I’m going to touch on these stocks with a broad brush. For more detailed figures click on the links to my old analysis.

Cronos Group (CRON)

I still really like Cronos Group and how well things are going for them the last year. Late last year Cronos Group (CRON) bought CanAdelaar B.V. CanAdelaar is the largest cannabis company operating in the Netherlands’ adult-use cannabis pilot program. CanAdelaar is the only industrial-scale greenhouse cultivator among the ten licensed producers in the country’s Wietexperiment program. They got a good price. The acquisition will cost $67 million in cash upfront, with additional contingent payments based on CanAdelaar’s performance in 2026 and 2027. The upfront is just aproximetely 1.4x CanAdelaar’s trailing twelve-month revenue and 2.4x its EBITDA.

Cronos’ CEO calls the CanAdelaar purchase a “highly strategic transaction that will establish a strategic presence in Europe.”

One of the important things I like about Cronos is management’s ability to execute. The company has been doing extremely well on gross margin over recent quarters. Last quarters gross margin was 51%! This is really attractive vs the competition.

I like the international growth strategy. One of the potentially big long-term growth drivers is expansion into the US market. They will do very well regardless of this materializing soon or not, however.

Some of the other big reasons I like the stock is because of the pristine balance sheet with a ton of cash and no long-term debt. The financial performance overall is a big positive. Sales are growing and they have strong market share in Canada and Israel. The big long-term growth driver is their international growth prospects.

Fourth quarter and full year earnings is coming up this Thursday the 26^th of this month.

FuelCell (FCEL)

One of the main things I like with FuelCell (FCEL) is the growth potential. I’m very bullish on fuel cells. Management is in talks with hyperscalers. They benefit from the tech industry’s awareness of the potential for fuel cells after Bloom Energy’s BE surge in hyperscaler sales last year. Different energy sources outside of the traditional are much needed to meet continued data center expansion and electric grid demands.

My base case for me is FuelCell gets a significant amount of data center power backup deals at the least.

Plug Power (PLUG)

Plug Power is another fuel cell company I originally found in deep value land. Plug’s electrolyzers are their big advantage. They use electricity to split purified water into super clean hydrogen and oxygen. A company can simply build a solar farm and get that solar electricity to power an electrolyzer. You use a transformer with a rectifier and AC/DC converters to convert the PV into a stable direct current. Then the electrolyzers create green hydrogen that is used for fuel. The green hydrogen is fuel for fuel cell and turbine power, industrial processes, or be blended into gas grids.

Plug Power’s H2 Hollandia project in the Netherlands does exactly this.

Construction is underway at H2 Hollandia where Plug Power is installing a 5 MW PEM electrolyzer that is directly connected to an adjacent 115‑MWp solar park. Surplus solar electricity runs the electrolyzer to produce green hydrogen.

This solar park model could be used to fill part of the energy capacity shortfall here in the US. To get more stable power if needed they can be supplemented with batteries.

The other big thing going for them is they are in talks with three major data center operators and engaged in initial tests with all of them. Big multi-year contracts with multiple hyperscalers are not all baked into FuelCell (FCEL) and Plug Power’s (PLUG) current stock prices.

Plug is especially a contrarian trade right now. Green hydrogen is like a foreign concept to most but there are 76 green hydrogen projects planned in the US over the next few years for $36 billion in investment.

The Hydrogen Council’s Hydrogen Insights report says around 1700 clean-hydrogen projects have been announced across more than 70 countries, up from just 228 in 2020. There is atleast $110 bil in total investment so far.

Plug has been scaling up lately. The total contracted electrolyzer capacity between Plug and its newer Allied partners project is now 5 GW across two projects (3 GW in Australia + 2 GW Uzbekistan). The companies framed this as one of the largest electrolyzer supply agreements globally, moving hydrogen from MoUs to “multi‑GW, real projects.”

Plug Power worked with Microsoft in 2022 on a hydrogen fuel cell power backup proof of concept that was successful. They can provide power backup for data centers. I see data center backup power contracts being a significant catalyst for the company soon.

American Outdoor Brands (AOUT)

This Smith & Wesson spin-off has a lot of things going for it. The things I like the most about AOUT are the durable brands, strong international growth and solid management. Management has been buying back stock the past five years.

International sales in the past have grown double-digit, outpacing domestic sales. They are a very small percentage of revenue, less than 5%. I see international growth being a long-term shareholder value driver. AOUT grows revenue without heavy capex so margin-accretive international sales will grow earnings.

Being a spin-off of Smith & Wesson, they benefit from cooperation in brand licensing and some shared lease agreements.

Let’s not forgot the best thing about it. The still cheap valuation. There is $110 mil in net tangible assets vs a $118 mil market cap.

Acacia Research Corporation (ACTG)

Acacia Research (ACTG) is very shareholder focused and diversified into free cash flow generating businesses. Their Deflecto and Printronix businesses both generate free cash flow and are relatively non-cyclical. They grew revenue well in the last quarter. They also have grown revenue well annually over the years.

The main thing I like about the company is the value-oriented management. I see all their segments including the Benchmark oil and gas segment being a growth driver.

The market cap is still just 50% over NTAV of $268 mill.

Coffee Holding Co (JVA)

Coffee Holding Company has a lot of good things going for it.

• They have more production capacity after the Empire Coffee acquisition.

• Revenue has grown consistently over the last few years.

• They are profitable on the bottom-line.

They were exposed to the tariffs and had a recent bad quarter because of that. But, I like the long-term business model and management’s ability to keep the business on course.

Gross margin can be a challenge sometimes but they navigate around it well. 2024 was the company’s third-best yearly performance in the company’s twenty-year history. They also grew sales 23% YoY last year.

JVA is now 50% below net current asset value.

Be on the lookout for the second part of this.

Full Disclosure: I am long CRON FCEL PLUG ACTG AOUT JVA

Does anyone have a stock in particular from my past articles here you want me to touch on? If so please leave it in a comment here.

I did a write-up on proteomics platform maker Seer, that sells tools focused on analyzing proteins, back in 2024. The stock was trading for half its net cash on the balance sheet. Seer is now trading 43% below net cash. There is $3.56 per share in net cash and equivalents and the stock is trading at $2.02. Cash per share is down around a $1 per share si…

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Tigo Energy (TYGO) is a newcomer in public markets listing just in 2023. It has a market cap of $288 million and great top-line growth. They have had a great trend of improvement on margins and I see this trajectory leading them to profitability soon(probably a year or two) with their target of roughly 40% gross margins maintained.

Founded in 2007, Tigo does smart hardware and software solutions that enhance safety, increase energy yield, and lower operating costs of residential and commercial solar systems. Tigo combines its Flex MLPE (Module Level Power Electronics) and solar optimizer technology with intelligent, cloud-based software capabilities for monitoring and control.

In simple terms, Tigo puts a small electronic device on each solar panel that helps each panel work better and more safely, even if some are shaded or dirty. The devices send data to online software that lets you see how much energy each panel is making and lets the system be controlled and shut down remotely when needed. MLPE or module level power electronics are very important for safety to avoid dangerous high voltages for responders and alert to fires. Here is an image of one below,

In the 2023 annual report they say they can power everything from single-digit kilowatt residential systems to commercial, industrial, and utility systems, scaling to hundreds of megawatts on rooftop, ground-mounted, and floating applications.

Potential Gem in Energy Storage

There is a potentially really big opportunity for Tigo Energy here with their comprehensive residential energy storage. For one, energy storage has been the fastest growing alternative energy industry over recent years. Also, the Virtual Power Plant model using residential solar storage is a clear path to reducing strain on the grid. Last year the Dept. of Energy (DOE) put out a report on Virtual Power Plants (VPPs) that says peak electric grid demand is expected to reach 900 GW by 2030. It’s estimated the US will need atleast 200 GW in new peak capacity by 2030.

The DOE called VPPs a critical solution to the pressing challenges of the grid. There was a Residential Clean Energy Property Credit 30% tax credit last year for qualifying home storage. So far, the progress in VPPs has been isolated in select states and cities. This leaves a lot of growth potential, especially if it is incentivized locally or federally. The trend is still maintaining. There has just been VPP expansion into Virginia last year. Virginia required Dominion Energy to do a virtual power plant (VPP) pilot with up to 450 MW of capacity.

The Federal Energy Regulatory Commission (FERC) orders 745 and 2222 have helped with building infrastructure. In 2020 order 2222 required grid operators to let aggregated distributed energy resources like home solar and battery to bid directly into wholesale markets for energy, capacity, and ancillary services. VPPs can now submit offers just like a power plant. These orders started a variety of business models that give more choices and cater to different regional market requirements.

Virtual Power Plant programs have become more of a trend the last couple years following the Dept of Energy report on them in 2023. They have become an additional way for homeowners to benefit from home storage investments. Approximately 37.5 GW of behind-the-meter assets participated in VPPs in North America in 2025, representing a 13.7% year-over-year increase. Deployments of VPPs grew over 30% last year. You can see the growth below

Smart thermostats have been a new innovation. Also, electric providers can aggregate distributed energy resources into Virtual Power Plants and bid their capacity into wholesale markets for revenue streams. In August 2025, Tesla partnered with Sunrun (RUN) to form a virtual power plant (VPP) that delivered 535 MW to California’s grid during a two-hour event. The federal orders show that financial incentives and innovation can lead to growth here, however, much work remains. Only around 5% of US households have rooftop solar.

Tigo Energy MLPE’s vs The Competition

Unlike current market leader SolarEdge, Tigo optimizers work with any inverter, giving flexibility, for example if after installation some panels are experiencing unexpected shading. Their TS4 optimization technology operates independently from the solar inverter. Tigo also uses Predictive IV technology, which calculates the optimal settings for each connected panel. Unlike SolarEdge, Tigo only requires optimizers on panels affected by shading, making it more cost-effective.

Universal Compatibility: Tigo markets its TS4 Flex MLPE as working with “thousands of different inverters” from almost any manufacturer. This is a major difference to SolarEdge that is incompatible to third party inverters.

On cost Tigo is less expensive than some other top competition like Enphase but according to my research Enphase has a much longer warranty.

Tigo allows you to install optimizers only on the specific panels that are shaded, leaving the rest unoptimized. This significantly reduces hardware costs because you don't buy equipment for the clear panels. SolarEdge requires an optimizer on every single panel in the string, whether it has shading or no shading. There is a caveat in certain markets. Selective deployment only works if you do not need module-level Rapid Shutdown (RSD) for the whole array. In the U.S., where code requires rapid shutdown for rooftop solar, you typically must put a Tigo device (either a full optimizer or a cheaper "Fire Safety" TS4-F/S unit) on every panel anyway to comply with safety codes.

My research found that SolarEdge and Tigo perform similarly in shade mitigation since they are both DC‑optimized string topologies. Enphase can sometimes edge them out in complex multi‑roof scenarios because each panel is truly independent AC.

It appears Enphase is known to be more reliable overall. Tigo’s MLPE’s win on cost and flexibility.

Tigo Energy Storage

Tigo began their energy storage business in late 2021 and it is about 10% of total company sales currently. They sell a residential solar solution, which bundles an inverter or their new GO battery, and automatic transfer switch into a single solar‑plus‑storage package for homes.

Just a about a week ago, they announced the new Tigo GO Battery. It’s faster to install than the previous model. It is a modular, scalable energy storage solution. It’s in 5kWh increments and expandable to up to 30kWh systems. The lightweight modules stack with plug-and-play wiring. The Go model takes up 40% less space than the previous model. It also qualifies for participation in select Virtual Power Plant (VPP) programs.

Tigo Batteries vs Competition

CNET notes the El Tigo battery has a 94% efficiency which is above the 90% average. It has an 11 year warranty which is on-par with competitors and the cost of the system is fair. It also has AC- and DC-coupling capabilities, so there's flexibility there. CNET’s overall EI Battery review describes it as solid, with no major weaknesses, scoring around average or better across categories.

Through an API‑level integration between Flip Energy and the Tigo EI Platform, the GO Battery gives installers a simple path to VPP capable storage without requiring additional hardware or complex configurations. So, it’s VPP ready from the start which is really good.

Tigo’s new battery is more customizable for homeowners needs vs Tesla and Sunrun’s batteries. Tigo’s new GO Battery being built from 5 kWh modules it scales well in both energy (kWh) and power (kW) by stacking those modules. Tesla’s are much larger at 13.5KWh and Sunrun comes at 9.3KWh, still almost double Tigo’s. Enphase has 3.3KWh modules so it’s competitive in that regard.

Zvi Alon CEO said in the Q2 conference call “one big differentiator that our products provide the market is we are segment not. We’re not dependent on any one specific segment. So residential, C and I, or utility scale use the same exact identical skew, the same order.

In overall sales and ecosystems, Tigo is still catching up in storage solutions to leaders like Enphase and Tesla. I really like that Tigo does so much sales in highly competitive Germany competing with leaders like SolarEdge and Enphase there.

VPP Ready

By integrating Tigo GO Battery assets into demand response and grid services platforms, homeowners can participate in utilities' demand response and grid services programs, helping to enable flexible load management and improved grid reliability. This looks like the future to me in the US with power company’s risks of grid outages. My utility provider here in North Carolina just the other day warned of strong potential for a grid outage.

Sales Growth

Unlike much of US solar like Enphase who get 80% of their sales from the US. 70% of Tigo Energy’s revenue is in Europe, Middle East and Africa. The Americas region is 26% of revenue. Management says 80% of sales are outside the US. Ceo Zvi Alon has said that although they are not the largest player, they excel in specialized niches that competitors struggle to reach. They are performing well in Germany and the Czech Republic where the competition is more fragmented with no clear duopolies.

Enphase in the US has 60% of MLPE market share and the top five companies have about 90% market share. My research found Tigo is one of the five top players globally though their market share is below 20%.

Tigo Energy’s five year sales compounded annual growth rate (CAGR) is 18%. It has really accelerated this year though. They are guiding for total sales midpoint of $103 mil this year. The overall MLPE market is expected to grow at a CAGR of 11-17% going forward.

Great Q3 Results

I want to highlight the recent quarter Q3. It really caught my attention with a lot of things. For one, sales for the quarter grew 115% year over year (YoY). In Q2 this year sales grew 89% YoY. The improvement on margins continued. They had GAAP operating profitability for the quarter. They also had positive adjusted EBITDA.

Balance Sheet

• Current ratio: 1.03

• $40 mil in cash and equivalents at quarter end prior to retiring the $50 mil in debt.

• Zero long-term debt after fully paying off the $50 million note due in January ‘26 with cash on hand.

• Shareholder Equity: $12 million

Income Statement Q3 Highlights

• 115% YoY sales growth

• 42% gross margin

• Adjusted EBITDA of $2.9 mil vs an adjusted EBITDA loss of $8.3 million YoY

• Positive GAAP operating income

• Net loss totaled $2.2 million, an 83.5% decrease compared to a net loss of $13.1 million YoY

• Net loss per share was just -$.03

  Below you can really see the revenue growth by regions pickup in EMEA and the Americas figures YoY.

  

• They shipped 795,000 units of Module Level Power Electronics vs 646,000 in the previous quarter Q2. Gross profit this quarter was $13 mil vs $10 mil in the prior quarter. To get a sense of how well they are managing margins we only need to compare it to the strong 2023 blowout year for sales. Sales for full year 2023 were a whopping $145 mil. They only ran a 35% gross margin that year. They had negative gross margin in 2024 and 30% gross margin in 2022.

Recent Developments

They recently got a domestic manufacturing marketing partnership with EG4 Electronics in the U.S. They expect this will offset any expected US market demand slumps. Tigo Energy is bringing manufacturing to the US for their US market. In the last quarter the US market grew the most at 68%. The decision was made to take advantage of the 45X federal tax credit for clean manufacturing here in the US. For the optimized inverters Tigo will make with EG4, the tax credit is expected to be 11 cents per watt which offsets the manufacturing costs here versus Asia.

Consistent Improvement

I like that they are improving the energy storage batteries to be competitive as evident from the upgrades just over a week ago. Management has been focused on sales and costs. They tied compensation packages to them. In 2024 they brought back Anita Chang as Chief Operating Officer (COO). She has over twenty-five years of experience in product management, engineering, and global operations.

Tariffs

They say substantially all of the MLPE products and GO Energy Storage Systems were manufactured in Thailand and future purchases may be subject to a 19% reciprocal import tariff. Beginning in October 2025 they transitioned production GO ESS product line for the U.S. market from China to Vietnam. Imports from Vietnam are currently subject to a 20% reciprocal tariff rate.

Valuation

The price to sales multiple is 2.8 with sales for the full year guided at $103 mil midpoint. This is 90% growth from last year! The Invesco Solar ETF (TAN) is at 2.3x price/sales. Larger established solar companies go upwards of 4-5x sales. My favorite solar stock of them all Nextpower (NXT) formerly Nextracker has a price/sales multiple of 5. These companies are not all growing sales around 100% like Tigo Energy is though even. When you look at Tigo sales from this quarters run-rate especially there is value in the growth.

I see the current price/sales multiple as cheap or fairly valued with their growth, especially given the current path to net profitability. Often a big catalyst for a stock is when a company turns to net profitability.

You know I prefer to have margin of safety in equities I cover here with discounts to net current assets or net tangible assets. When that is absent in a growth stock like this I see ascribing value to growth, industry and management as key. I see good things in those areas. The stock looks especially attractive in the 1-2x sales range if it happens to get back to that.

Technical Analysis

The stock has now made a technical bottom by breaking over the level in blue. Momentum is now up. The volume that came in on this move was high and unusual.

Full Disclosure: I have no position currently as having just found TYGO but I plan to buy a small position this week.

Sources

Virtual Power Plants: How The Power Inside Our Homes Can Stabilize The Grid

-University of Chicago Sept 5th 2025 Alexandra Costa

Pathways To Commercial Liftoff: Virtual Power Plants 2025 Update

-Dept. Of Energy 2025

I have been running bottom-up screens for value and don’t see anything new worthwhile at this time. That’s the nature of deep value. There aren’t usually compelling stocks trading for less than net current assets or even net tangible assets popping up every month in very strong bull markets. I was actually surprised by how many quality deep values that came about the last couple years. Incorporating thematics and rotation was a big part of me identifying those.

Big picture, I see 2026 and beyond having further strength in the alternative energy theme. So, I particular like FuelCell’s (FCEL) and Plug Power’s (PLUG) future growth prospects.

Outside of deep value I have done a lot of research on mining companies with strategic resources the past few months. The US government has made lithium and graphite a priority.

I continue to like Graphite One (GPHOF) and NOVONIX (NVX) long-term. I linked to my X research on these two here.

Full Disclosure: I am long FCEL PLUG GPHOF NVX NCSM CRON