As technological advances drive society forward at a staggering pace, and as people add an assortment of gizmos and gadgets to their repertoires, there is one component that hasn’t kept up. This is a necessary feature that has the Energizer Bunny frantically running scared.
But it isn’t as if small, yet highly powerful batteries aren’t possible, it’s just that other forms of technology have progressed at a much faster rate. This results in smartphones with short lifespans, computers that blackout after a couple hours, and electric vehicles that need to be recharged after about 200 miles.
What does that mean to companies desperately searching for a way to manufacture efficient batteries? It means a massive demand for a product that hasn’t been released yet. Once it is, look out, because auto companies manufacturing electric vehicles are waiting at the starting line. So what companies are set to provide the world’s first battery capable of keeping a bulb lit longer than the sun (OK, maybe that’s a stretch)?
Johnson Controls, Inc. (NYSE:JCI) is valued at over $23 billion, so even if the highly speculative advance battery market is not able to respond to years of optimism, the company is diversified enough to provide some security. In fact, automotive batteries make up only about 14% of the company’s portfolio. Investing in the sector via a wealthy and established company means betting on a firm with some of the leading scientists in the field. Johnson Controls, Inc. (NYSE:JCI) reported staffing 100 scientists in research and development, increasing the company’s chances of making the next-best discovery in battery science.
While shareholders wait for Johnson Controls, Inc. (NYSE:JCI)’s potential battery breakthrough, they should feel safe after hearing recent news about increasing demand for the company’s ventilation, heating, and air-condition in China. In fact, the company has indicated a 30% increase in manufacturing capacity at its Chinese plant in Guangzhou. But that could be peanuts compared to the potential profits realized if the company is first to release a revolutionary battery.
General Electric Company (NYSE:GE) is a massive player in many markets, and it has a major stake in lithium batteries. General Electric, one of the world’s most diversified companies, has increased its play in the lithium energy market. The company has placed much of its research and development on batteries, and sees potential in many areas relating to battery power.
For example, researchers with the company are developing both hybrid and battery technologies that can improve the ability for various transportation platforms, including cars, buses, and tugboats. A discovery in any one of these areas could recharge this stock, which has been relatively flat for the last three years.
General Electric Company (NYSE:GE) has already made a breakthrough in batteries, though it is relatively small compared to what could be coming. In 2011, the company’s team of researchers developed the Durathon, which is a molten salt battery that helps provide backup power for cellular phone towers, in addition to various other uses.
Polypore International, Inc. (NYSE:PPO) is a riskier play, but its potential upside could be greater due to its high stake in the advancement of battery technology. Valued at nearly $2 billion, the company is still relatively small compared to its counterparts. Needham analyst Michael Lew said he thinks Polypore International, Inc. (NYSE:PPO) is poised to “usher in a new era of transportation.” He said the Celgard division, maker of a separator material, puts the company ahead of its competition because of the “dry stretch” manufacturing process.
Polypore already has the attention of major battery users. Even competitor General Electric Company (NYSE:GE) uses a Polypore lithium ion battery. A similar type of lithium-ion battery is expected to be the driving force behind supercharged electric vehicles. It would make sense that a leader in lithium ions would be the first to make the inevitable breakthrough.
The Foolish bottom line
While there are hundreds of companies competing in this sector, the firm that is most likely to release breakthrough technology will have research and development finances to do so. Staying away from some of the smaller, riskier players in this sector and instead focusing on billion-dollar companies will keep your money safe, while still giving you the opportunity for huge profits.
Phillip Woolgar has no position in any stocks mentioned. The Motley Fool recommends Polypore International, Inc. (NYSE:PPO). The Motley Fool owns shares of General Electric Company (NYSE:GE). Phillip is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
The article Is 2013 the Year of Battery Stocks? originally appeared on Fool.com and is written by Phillip Woolgar.
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