Jabran Kundi
3 min read
In This Article:
We recently published a list of 20 Underperforming Stocks Targeted By Short Sellers. In this article, we are going to take a look at where Powell Industries, Inc. (NASDAQ:POWL) stands against other underperforming stocks targeted by short sellers.
Short interest refers to the percentage of publicly available shares that have been sold short. It is an indicator used by many investors to determine how strong a company’s bear thesis may be. Due to the nature of short selling, the short interest has become a popular indicator among investors.
The reason it is given so much weightage is that people betting against a stock have usually done solid research and are confident of a company’s downfall. They take unlimited risk, so when big investors or the smart money shorts a stock, people take notice. They try to unearth the red flags that may have prompted the high short interest.
We decided to dig deeper and try to find out where smart money sees trouble ahead. To come up with our list of 20 underperforming stocks targeted by short sellers, we looked at the worst-performing stocks of the last six months and then ranked them by the short interest.
A circuit breaker installed in a control panel illuminated by bright LEDs.
Short interest: 14.69%
6 months’ performance: -28.08%
Powell Industries, Inc. (NASDAQ:POWL) 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.
Powell Industries (NASDAQ:POWL) 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 (NASDAQ:POWL) 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.
Overall, POWL ranks 16th on our list of underperforming stocks targeted by short sellers. While we acknowledge the potential of POWL as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than POWL but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
