By Timothy Lutts
My favorite automotive investment today is a company in the component business that I mentioned here briefly two weeks ago. Its name is Maxwell Technologies (MXWL), and its products are ultracapacitors that use static electricity to store and release electrical energy and do it much more quickly than batteries ever can. These ultracapacitors are used today in a variety of industries, including telecom and aerospace, but their biggest potential lies in the automotive market, which is rapidly turning to hybrid and electric vehicles that can make great use of the technology; in fact, they’re already being used in buses in China. The company is not yet profitable, but analysts are predicting profits for 2010. In the second quarter, revenues grew 30% to $24.8 million, while the loss per share shrank to six cents.
As for the stock, it hit 15 in late July, and has been digesting that gain since, building a base around 13. Selling volume has been minimal, suggesting that the action is dominated by institutional position-building and not distribution.
There aren’t a lot of institutions on board yet; at the end of the second quarter, only 33 mutual funds owned the stock. I like MXWL as a buy today, with the warning that the stock market (very strong until today) is due for a correction, and if such a correction pushes the stock below 13, it could be painful.