Small-cap stocks are drawing renewed investor interest as growth opportunities emerge in niche sectors. One strategist sees strength in companies tied to energy transition, data centre infrastructure and rare-disease treatment.
BNN Bloomberg spoke with David Volpe, deputy chief investment officer and portfolio manager at Emerald Advisers, who outlined his top three picks: Tetra Technologies, Modine Manufacturing and Soleno Therapeutics. He says each has a clear path to expansion, supported by strong industry trends and improving financial visibility.
Key Takeaways
- Tetra Technologies is shifting from oilfield services toward industrial and chemical markets, targeting a revenue doubling and EBITDA tripling by 2030.
- The company is growing in battery electrolytes and oilfield water treatment, reducing reliance on saltwater disposal wells in Texas.
- Modine Manufacturing expects data centre revenue to rise from US$644 million this year to US$2 billion by 2028, supported by demand for cooling systems.
- Modine’s leadership in climate and thermal solutions positions it to benefit from hyperscaler capital spending and geographic expansion.
- Soleno Therapeutics’ new drug Vykat XR, approved for Prader-Willi syndrome, has seen strong early adoption and could surpass US$70 million in quarterly sales.
Read the full transcript below:
ANDREW: Time for Hot Picks. Our guest has Tetra Technologies, a supplier to the oil and gas industry and the mineral sector, as his top pick. He says the company has set a goal to double revenue by 2030. We’re joined by David Volpe, deputy chief investment officer and portfolio manager at Emerald Advisers. Thanks very much for joining us. Tell us about Tetra, please.
DAVID: Good morning, Andrew. So, Tetra has been around for several decades and, as you said, it’s known as an oilfield services name. It’s transitioning into more of an industrial player. Whereas the majority of its revenues were previously on the oilfield services side, going forward, most will come from two primary areas in addition to oilfield services.
This is really a chemical company, more than anything. One part of the business involves electrolytes that are being supplied to one of the world’s largest long-duration battery manufacturers — think batteries for data centres. That part of the business is poised for very strong growth starting next year.
Secondly, Tetra is a leader in purifying water from oilfield and fracking operations. That’s been a growing problem in Texas, and something needs to be done about it. Rather than disposing of wastewater in saltwater disposal wells — which have been linked to induced earthquakes — Tetra treats the water for reuse, such as irrigating land and supporting livestock. So again, we’re looking for the company to double revenue and triple EBITDA over the next five years. We like that one a lot.
ANDREW: There’s a lot of talk about the need to cool down these gigantic data centres. You have an idea here that’s involved in thermal management — Modine Manufacturing. Tell us what attracts you to this name.
DAVID: Modine is a growth story, and that’s what we focus on. The company is a leader in climate and thermal solutions. At data centres, there’s incredible heat to manage, and Modine is one of the top players in that space.
They’re on track to generate about US$644 million in data centre revenues this year, and they expect that to rise to US$2 billion by 2028. They’ve already raised guidance twice this year, and we think there’s a strong chance that trend will continue. They’re supplying two of the five biggest hyperscalers, expanding geographically, and they’ve got a solid technology moat.
As we’ve seen, capital spending from hyperscalers keeps climbing, and with that comes the need for more cooling and thermal management. Modine is well positioned to benefit.
ANDREW: And your third name is Soleno Therapeutics — a change of pace here. What attracts you to this one?
DAVID: The strategist was out this morning — and I’ll digress for a second — saying you can index your biotech holdings. But we believe active management is key, and Soleno is a great example.
This is a company with a drug, Vykat XR, that was approved earlier this year for Prader-Willi syndrome. If you haven’t heard of it, it causes excessive overeating — and it’s a very serious condition. People with it will eat almost anything, and the average life expectancy is only into the mid-30s.
Vykat XR has virtually no competition. Prescribers really like it. The company reported US$32 million in first-quarter revenue from its launch. For the quarter being reported tomorrow, estimates are US$48 million, but we think it’ll come in over US$72 million. The drug has a good safety profile, is well tolerated, and has strong physician support.
ANDREW: So the disease involves hyperphagia — insatiable hunger — which can also be a sign of diabetes.
DAVID: Correct, Andrew. It’s used to treat Prader-Willi syndrome, but yes, hyperphagia is part of it. This company has a tremendous growth profile, and we think that growth will continue from here.
ANDREW: Very interesting. You gave us three fresh names there. Really appreciate it, David.
DAVID: Great. Thanks, Andrew.
ANDREW: David Volpe, deputy chief investment officer and portfolio manager at Emerald Advisers.
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| TTI NYSE | Y | N | Y |
| MOD NYSE | N | N | Y |
| SLNO NASDAQ | N | N | Y |
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This BNN Bloomberg summary and transcript of the Nov. 3, 2025 interview with David Volpe are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.