Innio (INIO)

Innio (INIO-Q) specializes in manufacturing gas engines that generate electricity, primarily serving critical infrastructure and data centers. These engines utilize renewable energy sources rather than diesel, aligning with sustainable practices. Data centers contribute significantly to the company's revenue, making up 11% of overall sales while accounting for 61% of equipment orders. Recently, Innio has experienced impressive net sales growth, peaking at 26% through Q1 2026, largely driven by the demand from data centers. Despite this favorable trajectory, operating margins have faced some challenges, showing a decline in recent periods due to increased production ramping and rising raw material costs. While the enterprise multiple suggests a premium valuation at 46.1, analysts are optimistic, suggesting a target entry point of $29, although investors might consider starting with a small position at $33.72.