Wednesday, September 8, 2010

"Best in Class: Power-One Poised to Invert Solar Stocks" (PWER)

The stock is up 46 cents (4.26%) at $11.21.
I like the phrase "Best in Class".
Companies that earn the moniker usually return a bit less than the riskier stuff (I can't find them this second but there have been a few academic papers that make the point) but allow you to sleep the sleep of the innocent.
From TheStreet:

The most common photo-op for the solar sector is of course the solar panel itself, but some recent big flashes in the solar sector have come from camera-shy solar players, like inverter company Power-One(PWER).

Whether it's a massive solar array set against the landscape of the southwestern U.S. desert, or German residential rooftops decked out in solar modules, these images used to present a future in which solar energy is a much greater part of the world's energy mix aren't likely to change. Investors don't typically imagine the industrial furnaces, or any solar wafer making apparatus, and definitely not the solar inverter when they are conjuring up a green future.
The same preference for images of solar panels that has dominated the public perception of the solar sector carries through to the popularity of solar module makers with investors. Whether it is low-cost U.S. leader First Solar(FSLR), or one of First Solar's Chinese rivals, led by Trina Solar(TSL), it's the solar module makers that get most of the attention.

So it may not be among the proverbially "sexy"investment stories to perform the behind-the-scenes work of converting the DC current generated by solar modules into the AC current needed for the grid. Make no mistake, though, being underappreciated doesn't mean solar inverter companies don't deserve a look from alternative energy investors. Inverters are one of the most critical solar components for project developers of larger systems.

Consider that the solar inverter players, and specifically Power-One, are growing at a faster clip than many of the solar module companies. Power-One grew its inverter business from less than 1% of the global inverter market in 2007 to more than 5% in 2009 -- which made it the fourth-biggest inverter player globally, notably pulling ahead of German giant Siemens. By August 2010, Power-One claimed 11% of the global inverter market.

In less than two years, the Camarillo, Calif.-based company went from ninth place overall to the No. 2 position among global inverter companies. The rise of Power-One doesn't put it within arm's reach of German inverter giant SMA Solar Technology, which continues to dominate market share of the global inverter pie, but Power-One doesn't need to overtake SMA, or even come close, to deserve a look from investors.
A recent report from Stifel Nicolaus makes the claim that the solar inverter space is actually more compelling than the solar module market for investors. Stifel Nicolaus cites the pace of the market-share gains made by players like Power-One, and less intense cost pressure in the inverter space than that which exists for the solar module makers, as reasons why investors should not ignore these companies....MUCH MORE
TheStreet's Eric Rosenbaum is one of the best journalists in the alt-energy space.
Here's the six month chart from BigCharts, note how the earnings gap-ups in both May and August were both filled before the stock resumed the uptrend. Something to remember for the next earnings report.