As I wrote to Commodity Trend Alert subscribers last year, the next Big Thing in the commodities complex might be lead or environmentally-friendly battery technology. It might even be both.
What’s really exciting about this dynamic trend is how widely embraced this technology already is across the world, including China.
Consumers are purchasing gizmos, appliances or modes of transportation (motorcycles, cars) that are effectively powered by batteries and this trend is morphing into a major secular long-term event that will change the way many things we use are powered. You could say the world is turning away from fossil fuels – not overnight by any means – but certainly tilting towards environmentally-friendly power generation.
Earlier this decade we saw a renaissance in electricity innovation and now that progression is spilling over into battery technology. Today, I’m going to talk about an investment that can help you ride the rise of battery technology from the ground level up.
Based in China and operating a facility in New York, Advanced Battery Technologies Inc. (Nasdaq-ABAT) is a volatile micro-cap stock valued at $210 million dollars. That’s very small by CTA recommended standards; yet once in a Blue Moon, I find these highly speculative but potentially lucrative slingshot stocks that hold enormous potential. It’s happened on numerous occasions in CTA since 2003.
ABAT manufactures and distributes rechargeable Polymer Lithium-Ion (PLI) batteries, which are used in mine lamps, electric cars, bikes, cell phones, notebook computers, walkie-talkies and personal digital assistance devices. I urge you to become familiar with PLI because it will probably be a very profitable acronym for CTA. It is also emerging as a highly touted clean technology.
PLI batteries are superior to traditional rechargeable batteries and are leak resistant, less energy dense and environmentally friendly. The battery design is also unique – as thin as 0.5 millimeters.
On May 4, 2009, the company’s CEO, Mr. Zhiguo Fu bought $2,650,000 worth of shares at an average price of $2.65 – a massive 85% discount to its ten-year high of $17.18 per share back in 1999. The stock now trades just south of $4 but remains 54% below its post-sub-prime crisis high of $8.33 in October 2007. The stock bottomed at $1.34 last November.
We followed Fu in shortly thereafter with a recommendation last May. So far it’s tread water – down 8% – but that just means there’s still time to get a great deal on a moonshot play.
I really like what this company is doing. I like the fact it’s manufacturing alternative energy that’s clean, easy to market and most importantly of all, has a history of making money for shareholders. It’s also based in China where profits are almost endless if the story continues to gain universal appeal.
Despite the incredible volatility of this stock, the return on equity has averaged more than 25% per annum over the last five years. I think now is still a great time to speculate on ABAT.
Editor of Commodity Trend Alert
Disclosure: no positions