High signal stocks #6 (Jan 18)

Hello and happy Sunday!

The new and improved Yellowbrick Premium Portfolio is off to a good start with over 2% of outperformance v the S&P last week (which brings us to ~10 points of outperformance since May 2024 when v1 of the portfolio was launched).

Obviously, one week doesn’t mean anything, but I still find I like it better when we outperform the S&P, even if it's not statistically significant.

There were no changes to the portfolio this week, but we did a huge overhaul last week. So if you missed those changes, Yellowbrick Premium subs can find the holdings in the YB Portfolio Updates section of this email.

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We only added 8 new stocks to the High Signal Stocks list this week.

Below is a free overview for everyone.

YB Premium subs get four more overviews (a tin miner, German defense supplier, Chinese fintech, and lithium company), plus the link to the spreadsheet with all of the High Signal Stocks in the YB PREMIUM PITCHES section.

As a reminder, these are AI summaries. They include citations for the data, but should be double-checked. They are just meant to be quick overviews to help you determine if you want to dig in deeper.

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TSS, Inc. (NASDAQ:TSSI) - Price: $12.39 | Mkt Cap: $355M | EV/EBITDA: 15.3x | Net Cash: approx. $30M

Pitches from Multibagger Monitor (among others) on Yellowbrick (link)

TSS provides AI rack integration and high-performance computing infrastructure services for data centers, with Dell Technologies representing 99% of revenue under a multi-year agreement extending through 2029.[1][2] The market is treating TSSI as a failed momentum play after Q3 2025 revenue declined 40% YoY to $41.9 million due to Georgetown facility ramp delays, with the stock down approximately 60% from its $31.94 52-week high and trading at just 17.5x 2025E EBITDA despite being positioned at the center of Dell's AI infrastructure buildout for customers including xAI.[3][4] In reality, YTD revenue through Q3 2025 reached $184.8 million (up 88% YoY), systems integration revenue grew 20% in Q3 despite the delays, and adjusted EBITDA for the first nine months rose 59% to $10.7 million.[5] The balance sheet provides solid downside support, with $70.7 million in unrestricted cash (approximately 20% of market cap), bolstered by a $55.3 million secondary offering completed in August 2025 at $17.00 per share.[6][7] Management has guided full-year 2025 adjusted EBITDA growth of 50-75% over 2024's $10.2 million (implying $15.3-17.9 million), with the Georgetown facility now fully operational and rack volumes recovering strongly into Q4, and has provided initial 2026 guidance of 40-50% organic EBITDA growth.[8][9] The November 2025 appointment of Vivek Mohindra, Strategic Advisor to Dell's Vice Chair and COO, to TSSI's board signals the deepening partnership and validates the company's role as Dell's preferred AI integration partner.[10] On management's guidance, 2026 adjusted EBITDA should reach $22-27 million, and a re-rating to 15-20x forward EBITDA (still below AI infrastructure peers trading at 22-35x) implies equity value of $380-590 million, or 35-65% upside from current levels as the facility ramp-up normalizes.[11]

Sources:
[1] TSS, Inc. Q3 2025 10-Q, November 13, 2025: Business description and segment overview.
[2] TSS, Inc. Q3 2025 10-Q: Customer concentration, 99% of Q3 revenue from a single US IT OEM (Dell).
[3] Yahoo Finance TSSI quote, January 16, 2026: Current price $12.39, 52-week high $31.94.
[4] TSS, Inc. Q3 2025 Earnings Release, November 13, 2025: Q3 revenue $41.9M, down 40% YoY.
[5] TSS, Inc. Q3 2025 Earnings Release: YTD revenue $184.8M (+88%), Systems Integration revenue +20% YoY in Q3, YTD Adjusted EBITDA $10.7M (+59%).
[6] TSS, Inc. Q3 2025 10-Q: Cash and cash equivalents $70.7M unrestricted as of September 30, 2025.
[7] TSS, Inc. 8-K, August 14, 2025: Secondary offering closed at $17.00/share, 3,450,000 shares, net proceeds approximately $55.3M.
[8] TSS, Inc. Q3 2025 Earnings Call, November 13, 2025: 2025 Adjusted EBITDA guidance 50-75% growth over 2024.
[9] TSS, Inc. FY2024 Earnings Release, March 27, 2025: 2024 Adjusted EBITDA $10.2M.
[10] TSS, Inc. 8-K, November 13, 2025: Vivek Mohindra appointed to Board of Directors as Class III Director.
[11] Author estimates based on management guidance: 2025E EBITDA midpoint $16.6M x 1.45 (45% 2026 growth midpoint) = $24.1M; peer comparables from Pure Storage (28x EV/EBITDA), Vertiv Holdings (22x), Arista Networks (35x).

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Thanks for reading!

Connor

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What are high signal stocks?

Yellowbrick tracks thousands of investors and collects 10,000+ stock pitches each year. The stock pitches from the best investors are put in the Elite Investor Feeds on Yellowbrick (link).

However, many stocks owned by great investors are never publicly pitched by those investors. This email (and the corresponding spreadsheet) tracks all stocks that I know are owned by good investors (whether that good investor has pitched them publicly or not).

YB ELITE INVESTOR PITCHES

YB PREMIUM SUBSCRIBERS ONLY

New stock pitches from Yellowbrick Elite Investors that were added to the website this week. Fewer than 5% of the 3,000+ investors we track qualify as an Elite Investor.

This section is locked for Yellowbrick Premium subscribers only. You can upgrade to Yellowbrick Premium here.

HIGH SIGNAL STOCKS

YB PREMIUM SUBSCRIBERS ONLY

AI overviews (with data citations) of new stocks added to the High Signal Stocks list.

This section is locked for Yellowbrick Premium subscribers only. You can upgrade to Yellowbrick Premium here.

YB PORTFOLIO UPDATES

YB PREMIUM SUBSCRIBERS ONLY

Updates to the Yellowbrick Tracking Portfolio, which holds 30-40 positions that are owned by Yellowbrick Elite Investors. Fewer than 5% of the 3,000+ investors we track qualify as an Elite Investor.

This section is locked for Yellowbrick Premium subscribers only. You can upgrade to Yellowbrick Premium here.

THAT’S ALL FOLKS

Thank you so much for reading today’s email!

If you ever have any feedback, suggestions, or questions, you can just reply to this email or email me at [email protected].

Connor

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