When checking the stock quote for penny stock Power-One Inc. (Nasdaq: PWER), look a little deeper and you will find its one of the cheap stocks to watch. PWER popped up on one of our stock screens and it is more interesting than just another solar stock. Power One is the second largest manufacturer of solar inverters in the world, made renewable energy their priority and our top small cap penny stock to watch.
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Shares in Power One, PWER, closed at $4.06 in the last trading session, down 8 cents (-1.93%), on volume of 895.5 thousand. The penny stock has satisfied our criteria to be considered one of the cheap stocks to watch as the stock price of PWER has declined by nearly 50% over the last 200 trading sessions. Power One is a fascinating company with a plethora of products for power conversion and power management. Basically, they provide services and products to convert utility grade AC to various DC voltages needed for numerous applications, ranging from site, system and semiconductor.
PWER Stock Snap Shot:
Market Cap: 495.08M
Price/Sales (ttm): 0.49
Price/Book (mrq): 1.22
52-Week Change: -45.72%
52-Week High
(May 19, 2011): 9.15
52-Week Low
(Dec 21, 2011): 3.68
Avg Vol (3 month): 2,210,710
Avg Vol (10 day): 1,178,420
Shares Outstanding: 121.94M
Float: 100.03M
% Held by Insiders: 20.54%
% Held by Institutions: 75.70%
PWER Profitability
Profit Margin (ttm): 13.41%
Operating Margin (ttm): 17.15%
Revenue (ttm): 1.02B
Revenue Per Share (ttm): 9.55
Power One reported about $205 million in cash in their last 10-K (see here). Considering that the company has no debt and over $1 Billion in annual revenues, Power-One can afford to return $185 million in cash to the shareholders, without affecting its ongoing operations assuming that PWER needs to maintain 2% of sales as maintenance capital.
One of the more interesting lines from the 10-K is that “No customer accounted for more than 10% of our sales during the years ended January 1, 2012 (“Fiscal 2011”), January 2, 2011 (“Fiscal 2010”), or January 3, 2010 (“Fiscal 2009”)“.
In addition to a strong balance sheet, PWER reported a 13% Net Profit Margin and a ROIC greater then 30% for the last 2 years. If Power One can maintain this, it means that the company earns $1.3 for every $1 it invests in the business.
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Bottom Line: The renewable energy sector, especially solar stocks, is going through a “cool down” period after a rally in January as the renewable energy incentives offered worldwide are declining. PWER is a stock to watch especially considering that the company reduced its guidance for 2012 Q1.
Large solar companies going belly up has affected the U.S. solar energy sector and investors question whether any change in policy will affect the sector after the upcoming elections. Regardless, PWER has become a penny stock again and is starting to look sexy again. If it drops below $4, it changes from a penny stock to watch to a penny stock to buy.
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