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The Dynamic Wealth Report
August 26, 2010

by Robert Morris, Editor

“Renewable energy is the fastest growing source of electricity generation…”

This quote from the U.S. Energy Information Administration says it all.  The transition to an economy run on renewable energy is happening right now.  Solar power, wind power, geothermal… these are no longer the stuff of science fiction.

Countries all over the world are making huge investments in renewable energy.

Europe is leading the way… the EU countries together invested a massive $41.1 billion in renewable energy in 2009.  China was a close second investing a hefty $34.6 billion.  And the U.S. was third at $18.6 billion.

All together, a whopping $162 billion was invested globally in renewable energy last year.  And, the spending isn’t slowing down.  According to Bloomberg New Energy Finance, spending on renewables is expected to increase in 2010 to record levels… $175 to $200 billion.

The race for renewable energy is clearly heating up.

And for good reason…

Global power needs are expected to double over the next 15 years.  But fossil fuels like oil and coal are being blackballed because of their environmental impact.

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Fossil fuel emissions create harmful air pollution and contribute to global warming.  Oil drilling and coal mining disturb land and ocean wildlife habitats.  And converting fossil fuels into usable forms create solid waste and disposal problems.

Over time, the cost of fossil fuels is expected to rise sharply.  And the supply of readily accessible fossil fuels won’t be able to keep up with skyrocketing demand.

No doubt about it, global government and private investment in renewable energy is only going to go higher and higher.

This is great news for renewable energy companies.

While there are many different kinds of renewable energy sources, two of them are garnering most of the attention and investment dollars.  Solar power and wind power.

The U.S. plans on doubling both solar and wind capacity by 2012.  And China has even bigger aspirations.  They’re expected to become the world’s largest producer of wind power by 2013 and the top solar market within five years.

This bodes well for one company in particular… Power-One (PWER).

PWER is a small but fast growing provider of inverters to the solar and wind power industries.  Inverters are a critical component of electricity generation systems.  These amazing devices convert electricity from wind and solar so it can be fed back to the grid.

The market for inverters is huge and growing rapidly.

Last year, $4 billion was spent on solar and wind inverters.  That’s a 43% increase over 2008.  And according to market researcher, iSuppli, the inverter market will nearly double over the next five years.

While the market is growing fast, PWER is growing even faster.

The company just moved into second place on the list of the world’s largest manufacturers of power inverters for the renewable energy market.  PWER now owns an impressive 11% share of this fast growing market.

And, if you’re still not convinced, a glance at the most recent earnings report will show you this company’s on fire…

Revenue soared 135% to a record $215 million.  Net income rose significantly from a loss of $7 million to a profit of $24 million.  And earnings of $0.17 blew away analysts’ estimates by 70%.

Despite the company’s high octane growth, the shares are badly misvalued.

PWER Chart

At a recent price of $9.92, the shares are trading at just 13.6x the 2010 estimate of $0.73.  That’s an extremely low P/E for a company expected to grow earnings 51% a year for the next five years.

Given the positive industry outlook, the company’s huge growth forecast, rising earnings estimates, and misvalued stock price, I wouldn’t be surprised to see these shares double in value over the next year.  Grab your shares of PWER to ride the rising tide of renewable energy.

***Editor’s Note***  Just as an FYI, there’s something afoot in the energy sector.  We’re starting to see some big investments being made by some of the world’s savviest investors- guys like Warren Buffett, Carl Icahn, George Soros, and even Bill Gates.  We’re in the midst of preparing a FREE report that details exactly what we see going on- and how you can profit from it.

ETF Action 

•  Renewable Energy ETFs Heading Higher

Investors are piling back into renewable energy stocks today.  The industry is on fire after a strong second quarter.  And many of them provided better outlooks going forward.  Several renewable energy ETFs are jumping today:

Elements CS Global Warming ETN (GWO) is up 9.8%
Elements MLCX Biofuels Index ETN (FUE) is up 8.8%
First Trust Clean Edge Green Energy ETF (QCLN) is up 2.8%


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Issue Date:
 Thursday, August 26, 2010


Notable Highs and Lows

•  hiSoft Technology (HSFT) hit a new 52-week high of $18.85.  The IT outsourcer is surging more than 9% after posting blowout earnings last week.  Their market cap is just over $95 million.

•  DynaVox (DVOX) set a new 52-week low of $10.61.  The technology firm is plunging over 26% today due to a big earnings miss.  Their market cap is now just over $100 million.

•  Valero (VLO) fell to a new 52-week low of $15.55.  The oil refiner’s dropping more than 3% on reports of a leak at one of their refineries.  They have a market cap of over $8 billion.


Quote of the Day

"It is a characteristic of wisdom not to do desperate things."

                      -
Henry David Thoreau

 
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