MXWL: An Automotive Investment for the Future

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.

Comments

[Kevin_T:]

These "ultra caps" are interesting but still have some inherent problems for automotive use. They don't take well to rapid charge/discharge at high current which is what you need in an electric or hybrid car. The cost is still very high to make enough of them to power an electric car.

A couple of major breakthroughs are still needed to make them practical and economical. So their future depends on future innovation that may not occur. Like the fuel cell, they may just continue to have a lot of promise that is never fulfilled. The fact the ultra-cap or super cap has been around for several decades and these problems have not been solved is cause for concern.

Sep 02 06:44 PM