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Battery Technology - Making Constance Happy

Recs

9

June 20, 2010 – Comments (6) | RELATED TICKERS: HEV.DL , PPO , AONEQ.DL

We noticed an article titled Buffett's Bet Sits Out Battery Rally. The article mentioned that it was a strong performance week for Energy Storage and Battery Technology stocks, with few exceptions.

Admittedly, this is a market segment that we had never really heard of, but it did pique our curiosity about some of the companies mentioned in the article. So being the inquisitive individuals we are, we checked out a few of the mentioned companies.

The Companies

First up was Ener1, Inc. (Nasdaq: HEV) a company that designs and manufacturers lithium-ion batteries. The company recently partnered with Russia's Federal Grid Company to develop energy storage opportunities which we think is sort of like saying a guy with no underwear walked around all day with his zipper down.

While we weren't very impressed you could be. To download the Ener1 worksheet, please click here.

Next on the list was Polypore International, Inc. (NYSE: PPO). What we found so curious about this company is that they make filtration membranes, or so we thought. But surprise surprise, the company also makes membrane separators, an item critical in the manufacture of lithium and lead-acid batteries. Of the companies we looked at, this was the only one that had a Reasonable Value Estimate greater than zero.

To download the Polypore International worksheet, please click here.

This brings us to Valenace Technology, Inc. (Nasdaq: VLNC) a company that we honestly thought was a start-up, only to find out that the company was founded in 1989. The company comes very very close to having a Tangible Book Value, but not quite as close when it comes to its technology, which we finally decided, must not be very unique, explaining why the stock is trading under $1.

To download the Valenace Technology worksheet, please click here.

The last company with breath taking lithium-ion technology was A123 Systems, Inc. (Nasdaq: AONE), which we finally agreed, was just another retread of all of the rest of the companies mentioned in the article. The company does have a Tangible Book Value of about $5.00, but really doesn't make any money. With such a catchy company name, we think longer-term investors might be better served just investing in any company from Nebraska that makes socks.

To download the A123 Systems worksheet, please click here. 

Final Thoughts

She stood in the doorway listening for the feint buzzing sound, keenly aware of just what it would mean. Straining, the sound simply could not be heard. She stood still, every fiber aroused, every hair on the back of her neck standing up, every one of her senses operating in high gear.

Finally! There it was, the low slow buzzing sound she had been anticipating, finally he had put all of the clues together.

She crept toward the bed, not making a sound, anxious to arrive unnoticed, in a deft attempt to become one with him, to experience the firmness she knew was there.

At last she arrived at the bed and with one continuous motion arrived atop of what she had been craving all night.

Startled, he reached out to find her already working to become prone on the object of her desire, the need now so great.

He looked at her and extend his arm. I hope the fan doesn't keep you awake, it took me a while to find the battery, but don't fret, the power should be restored in a few hours.

But by the time his words were out, Constance had curled up on his stomach, and purring loudly, fallen into a contented sleep. 

Wax

6 Comments – Post Your Own

#1) On June 20, 2010 at 1:54 PM, MegaAsia (< 20) wrote:

Yeah, battery tech companies are junk.  Profitable companies like ABAT, HPJ, CRTP, NEWN.OB are the only way to play it.  BYD seems fairly priced right now - but their future depends on executing as a car company, not as a battery company.

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#2) On June 20, 2010 at 4:17 PM, wax (97.17) wrote:

To us, the world is still a very long way from adopting alternative energy sources.

Byd may indeed be trading at an attractive price today, but the question is how long will they remain in the current price range?

We just believe that there may be better places to invest speculative cash rather than in electric car companies, battery technology, etc., that will produce much more immediate returns.

Wax Report this comment
#3) On June 20, 2010 at 7:10 PM, anchak (99.84) wrote:

Hey Wax! Thanks man - keep up the good work - anything good about good old Exide?

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#4) On June 20, 2010 at 8:20 PM, wax (97.17) wrote:

Anchak;

Exide has sort of gotten beaten up since WalMart decided to drop them as a battery supplier. Certainly the loss of revenue will hurt the company in the coming months, but the reason for that is because they simply carry to much debt.

The company has been around a long time, and we think they have a supplier agreement with Toyota. Not sure about that, but that's what we remember.

Regardless, based on a five year hold and a very preliminary review of their most recent financials, we think a Reasonable Value Estimate for the stock is about $23, but because of the debt management has not yet started to deal with, we think a fair entry target is between $7-$8.

Our worksheet for the company based on FY10 results is linked here, feel free to use it as you see fit.

Wax

 

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#5) On June 22, 2010 at 9:39 PM, j0jitzu (< 20) wrote:

I recently took a long position in ABAT.  I like the numbes they are putting out and the weekly chart pattern is showing a nice dry up of volume at the current price range.  Anyone have a valuation?

jbk

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#6) On June 24, 2010 at 5:49 AM, wax (97.17) wrote:

jbk;

We think a reasonable value estimate for the stock based on the FY09 (last audited) financial information, is about $10. However we want to caution here, the company only has a market cap of $235 million, so it is quite small.

The company has just entered the US electric car market and is working with electric car companies in China. All fine. But what special battery technology does the company have?

One more thing we noticed was that there were several news events triggered by what everyone is supposed to think are stock analysts.

Don't buy it. For the most part these are nothing more than fly by night operations with a website hoping to run the stock price up or down so they can make money.

Most of them couldn't find there way to the bathroom, much less provide fair stock analysis.

At any rate, our preliminary worksheet for the company can be downloaded here if you want it.

Best of luck with your trade.

Wax

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