TSS, Inc. (TSSI): A Bull Case Theory

We came across a bullish thesis on TSS, Inc. (TSSI) on Substack by Brad Steveson. In this article, we will summarize the bulls’ thesis on TSSI. TSS, Inc. (TSSI)’s share was trading at $11.31 as of Feb 26^th. TSSI’s trailing P/E was 65.24 according to Yahoo Finance.

TSSI is at a pivotal moment, combining operational efficiency, strategic expansion, and a disciplined management approach to drive significant growth. A recent visit to the company’s factory offered firsthand insight into its transformation, guided by CEO Darryll Dewan, CFO Danny Chism, and COO Todd Marrott. The Q4 results remain undisclosed, but there was a quiet confidence among executives, reflecting a strategy of under-promising and over-delivering—a stark contrast to the hype-driven narratives often seen in tech.

A major catalyst for TSSI is its new facility, which isn’t just an expansion but a calculated move to scale operations up to eight times their current levels. The company is also addressing power constraints, ensuring they can meet future demand. The fate of the existing facility remains under discussion, with options including subleasing, storage, or using both locations to serve multiple clients simultaneously. This flexibility could be instrumental in driving further growth.

One of the most impressive aspects of TSSI’s transformation is the impact of COO Todd Marrott, who has dramatically improved efficiency on the factory floor. Processes once cumbersome are now streamlined, with clearer workflows and better-trained technicians. The company’s ability to complete complex, multi-million-dollar racks in as little as 24 hours—compared to two weeks previously—is a testament to these improvements.

A key factor in TSSI’s trajectory is its relationship with a strategic customer, which presents both challenges and opportunities. The company is navigating this dynamic carefully, ensuring financial and operational support while looking to diversify its client base. The management team’s strategic execution, coupled with their focus on steady growth, positions TSSI as a compelling investment.

TSS, Inc. (TSSI) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 3 hedge fund portfolios held TSSI at the end of the third quarter which was 0 in the previous quarter. While we acknowledge the risk and potential of TSSI as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than TSSI but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article was originally published at Insider Monkey.