Christopher Bayliss
Long/short equity, deep value, value, research analyst

Power-One: Cheap At First Glance But Not Upon Deeper Analysis

Power-One (PWER) is a leading company in the solar and wind inverter market. A recent article by Alan Brochstein piqued my interest in the company. The company went from having the 9th-highest market share in 2008 to having the 2nd overall market share by 2010, as revenue in its renewable energy segment increased 450% over that span. This market has remained strong. Furthermore, there are numerous macroeconomic factors aiding the company including growth of the solar market in many regions, and improved solar technology that reduces cost. Yet the company is trading at unbelievably cheap levels as seen below:

These valuations result from the significant difficulties facing the company moving forward. Its two biggest markets, Italy and...

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