Power Solutions International, Inc. (NASDAQ:PSIX)

CAPS Rating: 5 out of 5


Player Avatar XMFChaodan (77.56) Submitted: 7/22/2013 9:15:14 AM : Outperform Start Price: $45.13 PSIX Score: +16.45

Power Solutions seems like it is headed in an upward trajectory. However this growth is heavily dependent on the expected EPA regulations tightening which is already happening. When the EPA tightens its regulations, it is usually the case that other countries will also move towards doing the same. PSIX already has strategic partnership with MAT (an OEM that has most of the market share in China for industrial forklifts). The pie is going to expand.

On the other hand, I'm not exactly sure if Power Solutions would be the best positioned among its competitors to take advantage of the widening pie (also, there is the question of whether or not the pie will actually widen, given that it is all very political). PSIX is trading at 17x book when its competitors are only trading at around 2-6x book. They also have 9x debt as they do cash. I am looking to end this pick when the 10-day minimum is met.

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