20 Underperforming Stocks Targeted By Short Sellers

16. Powell Industries, Inc. (NASDAQ:POWL)

Short interest: 14.69%

6 months’ performance: -28.08%

Powell Industries, Inc. is a designer, manufacturer, developer, seller, and service provider of custom-engineered equipment and systems. Its key products include custom-engineered modules, medium-voltage circuit breakers, integrated power control room substations, switches, and other products.

The company outperformed in the previous fiscal year, doubling its revenue and achieving gross margins of 27%. The company operates in a market that has historically had narrow profit margins of about 16 to 18% and is highly cyclical, so the firm made the best use of high demand.

Despite the stellar performance, Powell Industries faces potential risks from trade war uncertainties and a US economic slowdown, as it could cause project delays, resulting in reduced demand. The company operates in a competitive market, which could create price challenges from larger players after supply normalizes. Delays in projects like LNG and emerging technologies like carbon capture products could affect its earnings estimates as they are the main demand drivers for the firm.