Power Solutions International, Inc. (NASDAQ:PSIX) is one of the stocks Jim Cramer looked at. Cramer highlighted one of the main reasons for the stock’s “harsh sell-off,” as he stated:
This is precisely the kind of stock I tell you to look for in How to Make Money in Any Market… After the pullback late last year, the stock made another run starting in 2026 briefly, trading into the triple digits again in mid-February. But since then, the stock had a breakdown encore, taking it down to the point where it’s now trading in the mid-50s. So what the heck on earth happened here?… Well, the biggest chunk of the decline came last Tuesday when Power Solutions International reported, and the stock plunged nearly 29% single session next day, awful. While the quarter represented top and bottom line beat, when you drill down, other major line items like gross profit and EBITDA had year-over-year declines. Now, that was a major departure from last year. I think this is a significant step down, and it is significant in margins in the fourth quarter was the main reason for such a harsh sell-off. But I also think that this dislocation might represent a good opportunity to get into the stock. Yes, into it.
Power Solutions International has been nearly cut in half in less than a month and to me, this looks like a terrific entry point because there’s nothing wrong with the data center thesis… Part of the issue here has to do with some of the quirks of the Power Solutions story. For example, and this bothers people, the company doesn’t hold a regular conference call; they just put out a press release. So while the margin pressure might have been something that they could have explained by management on a conference call, there was no call, and we just had a quote from the CEO on the press release. It was kind of stunning. At the same time, it didn’t help that management declined to issue any formal guidance this year, a big change versus previous quarters. They did offer some commentary on the outlook for 2026, which I thought was broadly positive…
Are we positive on PSIX? Come on, I have to try this. After taking a closer look at Power Solutions and what’s caused this recent pullback, you know what, I actually still think this stock looks real good. Stock’s been overly punished when it was sold off last week, and I’m betting many of the worries here will turn out to be overblown. Plus, with the company expected to earn $5.61 per share this year, Power Solutions International is now selling for right around 10 times this year’s earnings estimate. When you compare that to something like Caterpillar at 31 times, Cummins at 21 times, this looks like a steal. Of course, there’s a reason why PSIX sells for such a discount. They’re a lot less transparent than your typical publicly traded company, and it’s a small-cap operator with major ties to China. But none of these, for me at least, are deal breakers, which is why I’d be a buyer down here. I think data center buildout is here to stay, and there’s growth enough for everyone, including PSIX.
Photo by Adam Nowakowski on Unsplash
Power Solutions International, Inc. (NASDAQ:PSIX) develops and sells engines and power systems along with custom electrical generation units.
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