Power-One Looking to Add to Recent Momentum
    January 31, 2011  PSW Staff
    Power-One Inc. (PWER) has seen a more than 100% gain over the past year, and an
    unbelievable 2000%+ since March of 2009.  What is perhaps even more unbelievable is the
    fact that PWER still has a P/E of 14, and a forward P/E of 8.  Does this mean that more good
    times are ahead for the stock?  The company realized a record breaking third quarter, and
    has provided strong guidance for the final quarter of 2010, but the stock has stalled a bit over
    the last six months.

    Power-One makes energy-efficient
    power conversion and power
    management solutions for
    renewable energy and other
    applications.  The company is worth
    around a billion dollars on the open
    market, and has around 100 million
    shares outstanding.

    In October, the company announced
    revenues of $314 million for the
    quarter, a 214% from the prior year,
    and more than half of what was
    seen in all of 2009.  This comes on
    the heals of $214 million in the
    second quarter compared to $152
    million in the first quarter.  The
    company also increased their
    operating margin to 32% versus
    break even a year ago.

Renewable energy solutions saw a 634% increase over the previous year, and the company
increased market share by becoming the second largest manufacturer of inverters in 2010.  
The alternative energy segment accounted for 73% of the companies revenue as compared
to 31% a year ago.  What is particularly interesting, however is the fact that it's other
segments saw growth as well.

The company has said it expects revenues to be around $340-$360 million for the fourth
quarter, and expects continued market share gain.  The company made strides with respect
to their balance sheet as well.  Cash flow for the last two quarters has more than eclipsed
cash flow for the previous three years.
Management has seen a 25% return on assets over the last 12 months, and a 50% return on
equity.  This is quite a bit more than what has typically been seen with alternative energy
companies.  First Solar (FSLR), a leader in solar energy, for example, has seen 13% and
22% respectively, which is considered good.

This stock remains very reasonably priced compared to others and it could be a function of
market forces, rather than results.

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