Battery Powered Stocks
Kevin is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
You're probably asking yourself: 'as opposed to stocks that need an electrical outlet?' In all seriousness, companies in the battery business have a strong outlook. New types of batteries for alternative energy items, especially cars, are increasing in need. These companies span the globe, and some are diverse while others have a laser-like focus. A wisely constructed combination of battery stocks makes for a smart portfolio addition.
For a large-size company check out EnerSys (NYSE: ENS). EnerSys is the world’s largest maker of industrial batteries with customers in over 100 countries. ENS is getting high marks from analysts after surprising the stock community with three straight quarters of unexpectedly positive earnings thanks to strong demand in the Americas and Asia that has offset softness in Europe. The outlook for 2013 is good and the vast majority of Fools have picked it to outperform.
For a very cheap battery stock that has the potential for high profits, Exide (NASDAQ: XIDE) looks to be worth a risk (yes, I used the word risk, astute of you to notice). XIDE has a -5.10 P/E and is near its 52-week low. Obviously cheap, the risk is worthwhile for a few reasons. XIDE made a $45 million land sale this summer, is in the middle of a multi-year restructuring and has plenty of liquidity while trading below book value. XIDE looks like a stock ready to rebound on even the slightest good news and is a cheap way to speculate on the potential for Stop-Start technology (a far cheaper relative of hybrid technology being adopted by automakers trying to meet ever more stringent fuel economy ratings) to become widely adopted.
For those believing that Stop-Start technology has a real future and wanting to play the new invention angle, look at Maxwell Technologies (NASDAQ: MXWL). MXWL makes battery-ultracapacitor hybrids which are an alternative to the heavy duty lead acid batteries currently used in Stop-Start situations. These lead acid batteries are bigger than typical car batteries and are plagued by shorter life spans. The hybrids made by MXWL are an improvement in the life span department.
Another battery stock ready to come off a downtrend is A123 Systems (NASDAQOTH: AONEQ). After a much bally-hooed IPO in 2009, AONE promptly nose-dived and sits at the low-end of its 52-week range, has a P/E of -0.19 and is all but forgotten. At this point AONE either goes out of business or turns things around. It makes Lithium ion batteries for many different applications. AONE is still investing in technology and the advanced batteries are produced using proprietary nanoscale electrode technology developed at MIT. This one is a risky but cheap buy with a huge reward possibility. AONE has been around since 2001 and is no stranger to cutting edge technology, which bodes well for a battery company since technological advancement is a prerequisite to success in this field.
To add in some non-US based battery stock action, the China based Advanced Battery Technologies, Inc. (NASDAQOTH: ABAT.PK) has some real potential. This is another stock that has survived recent beatings and is priced very low. It’s at the bottom end of its 52-week range and has a P/E of 0.67. ABAT develops and manufactures rechargeable polymer lithium-ion (PLI) battery cells for portable computers and cellphones. After surviving an 89% decline, this battery maker is looking like another rebound profit opportunity. Not only very cheap, ABAT is solid with a strong balance sheet and is engaged in expansions, including a new facility. In the last five years, ABAT has produced more than a 20% return on equity and shown impressive performance that belies the currently cheap price.
Bear in mind that most of these proposed stocks are: very cheap, offer huge potential for rebound profits and have strong support from Fools, yet still carry more than average risk. But, for the investor seeking to power their portfolio with some batteries, these stocks offer real potential at bargain-basement prices.
thedeswolf has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.