Services Sector Ideas

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American Superconductor - info -


http://seekingalpha.com/article/308471-5-small-stocks-with-home-run-potential?source=yahoo


>>> 5. American Superconductor (Nasdaq: AMSC)


Nov 16, 2011 -


Recent price: $4.06

This maker of wind turbines deserves a mention, albeit short (I profiled this company in more detail here). The abrupt end of a large and profitable relationship with Chinese wind-power provider Sinovel has led to a sharp drop in the company's results. But just-released quarterly results show a 30% sequential jump in bookings as the company lands new customers. A lawsuit that seeks $1 billion in damages from Sinovel could be a game changer for the company, which is valued at just $230 million. I dont' have a precise price target yet because there are too many variables right now -- where the stock goes depends on the outcome of the lawsuit with Sinovel, backlog growth and the move back to profitability. But it's definitely worth monitoring it to see if business rebounds. <<<



March 2011 -


http://www.streetauthority.com/value-investing/these-3-stocks-are-absolute-bargains-458138



>>> 1. American Superconductor (Nasdaq: AMSC)

I first profiled this maker of wind turbine equipment about a year ago, noting that the company was in the midst of a strong growth phase. Back then, I noted that sales looked set to rise to $400 million in fiscal (March) 2011. Instead, American Superconductor pre-announced sales of $435 million, up nearly 40% from the prior year. Trouble is, management said that the upcoming June quarter will see a sequential dip in sales before sales growth returns in subsequent quarters. The predictable reaction: investors dumped the shares down to a 52-week low of $21.70 on Monday, March 14.

Perhaps lost in all the action was that American Superconductor also announced an impressive $265 million acquisition that greatly expands the number of products it sells into its base of wind power customers. American Superconductor is acquiring Finland-based Switch Engineering, which provides power converter systems. Switch has been focusing on the use of large permanent magnets that capture energy from spinning turbines. These are increasingly replacing gearing systems, which have tended to wear out in these high stress environments.

In posting the deal, American Superconductor noted the things I look for: Most of the deal is being paid from existing cash balances, meaning it is not issuing too many new shares or issuing debt; the deal will immediately boost profits (on a per-share basis); and the acquired company faces a large potential market, perhaps on the order of $1 billion annually.

As noted, American Superconductor expects to see a modest sales slowdown in the June quarter. Yet, the company remains the premier play on wind power in China. The rising concerns about nuclear power due to the disaster in Japan could well encourage China to step up an already-ambitious wind power development program. With or without that, I expect American Superconductor to be a solid grower -- on an annual basis -- despite any near-term concerns. <<<