ELVA’s demand is healthy with a secular tailwind across multiple end markets. The most recent quarter also marked the company’s eleventh consecutive quarter of positive Adjusted EBITDA, while the company’s financial position remains healthy and can support organic growth in the near term. Though the company is no longer at a cash-burning stage and already has product-market fit, it may still need to raise additional equity to fund growth. ELVA is still a type of high-growth name that is volatile with meaningful risks, and investors may need to size the position accordingly. ELVA may fit investors that are comfortable with volatility and seek long-term growth potential. We think if management continues to execute well, ELVA stands to continue growing its topline by around 30% in the foreseeable future. However, again, it is still a high-risk type of name. We are initiating our rating at “B”.

The company went through a large corporate transition in October 2024 to convert AW from an open-ended trust with a stable, high-yield profile to a growth-oriented, capital-light franchisor. With that said, after two years, the company has not yet accelerated growth as investors expected. The key revenue driver for AW in recent years has been service fee migration, as AW raised its royalty fees from 2.5% to 3.5% in FY2025. This migration has been a significant tailwind for margin expansion in FY2025 and into next year. The company’s long-term growth algorithm of 3%–5% same-store sales growth (SSSG) along with ~2% unit growth is expected to benefit long-term holders, though AW has underperformed from an SSSG perspective and has room for improvement. AW is trading at a discount valuation given the quality of the business. Overall, despite weak same-store sales in recent quarters, AW’s business model remains highly attractive. We are maintaining our rating at “B”.

PSI is a leading global provider of data management systems for oil and gas drilling. Therefore, the company’s operations are heavily impacted by commodity prices, which drive drilling activity. PSI has a near-term tailwind driven by strong oil and gas prices due to the Iran War, which has pushed commodity prices higher and is expected to drive additional drilling activity. Artificial intelligence is also driving increased demand for both power and data, both of which benefit PSI over time. The company possesses an 8-year track record of outgrowing the industry despite the continued headwind of declining rig count over the past ten years. With a clean balance sheet and disciplined capital allocation policies that prioritize organic growth and capital returns, PSI is not the type of high-growth name that could be a life-changing opportunity, but investors can consider PSI as a low-risk dividend cash cow with a high certainty of growing its topline by 3%–5% organically over time. We are maintaining our rating at a B.