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Power-One Looking to Add to Recent Momentum

|Includes: Power - One, Inc. (PWER)

Power-One Inc. (NASDAQ: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 (NASDAQ: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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