This company is an alternative energy company that manufactures lithium batteries for electric vehicles. I've been watching this stock for the past year or so and it has taken a beating with the Japanese earthquake, cash flow problems and poor financials. Not many reasons to invest here, right? But, the stock is down to $5.70 (low was $5.35 last week) after a high of $10.77 just in January of this year. The reason that I'm thinking about buying is because as oil and gas prices increase, the demand for alternative cheaper energy goes up. So as gas prices hit $4/gallon this summer, more and more people are going to get excited about electric powered vehicles which will drive momentum for this stock. This stock may have some serious legs if they sign a big contract or even if market sentiment starts pushing alternative energy. I think the stock may have hit a bottom and may start to work it's way back up towards $7-8/share. Cash flow is a problem which is why they just had to go back to the markets and sell stock. That's the main reason their stock has gone down over the past month.
Take a look and tell me what you think. I have a friend who works for A123 and he keeps on telling me that good things are happening and it's a good long-term investment.
JG
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ReplyDeleteHey Jeremy -- interesting insights. I've never done any trading in my life, but your blog's making me want to get "involved" (something I've always desired to do).
ReplyDeleteIs there a particular website you prefer to trade on over others?
Joe
I use Scottrade because it only charges $7/trade and they have pretty nice research tools and it's easy to use. Scottrade only requires a $500 deposit to get started. I also use finance.yahoo.com portfolios for stock research.
ReplyDeleteYou should definitely get started, even if it's just paper trading at first. Let me know if you have any more questions.
Wow - did you see AONE today?? Up 12%!! Glad I bought that one!
ReplyDeleteThis was recently said about A123 in the WSJ: We have "buy" ratings on Ener1 and A123. Like I said before, we also think Tesla is going to be a winner in this space. I think we are most positive on A123 currently. The stock currently trades at only about 1.5 times book value. That implies very little expectations for a stock with this much potential growth. Yet when we talk to automakers and other battery competitors, they all consider A123 a top five player in the industry for the long term. We think that they have a very strong long-term potential, and we see some near-term catalysts.
ReplyDeleteOne of their key customers is Fisker Automotive, another startup automaker. I think that there is a lot of skepticism about whether Fisker actually will launch their vehicle on time, but we are very confident that they will get the vehicle out on time in March or April of 2011. So I think the launch of that vehicle could be a positive catalyst for A123. Their revenue ramp looks very strong this year, going from $100 million in 2010 to well north of $200 million in 2011, and then we are looking for $600 million plus in 2012 - so a very significant revenue ramp that's going to start to become visible soon.
We think as volume starts to move through the plant, the margins are going to improve significantly. Lastly, I would say that they have been talking about a major OEM contract that they feel very confident that they will win, and so we think that there is a good chance that you will see a positive announcement of a new customer coming up soon. We are most positive on A123, although we think all three companies are going to be winners in the long run.