Making Big Bucks From Batteries
For this week’s edition of Speculation Friday, Cramer’s leapfrogging off the success of a previous Mad Money pick.
Battery-maker EnerSys is up 6% since his May 21 call. Now he’s recommending two more names from the sector – though admittedly these are much more risky.
Exide makes old-fashioned lead acid batteries. Cramer said he’d considered XIDE before, back when he recommended EnerSys, but he was worried about overexposure to the autos sector. Well, XIDE’s up almost 10% – better than ENS – since then, proving Cramer was a touch overcautious. Turns out XIDE earns more than half its revenue overseas, so the weak North American car market isn’t as much of a concern. With only one analyst covering XIDE, there’s still room for this stock to move.
If Exide’s a speculation play, then Ener1 might be traded purely on hype. The future of this as yet unprofitable company seems to depend on three cutting-edge alternative-energy technologies: a lithium-ion battery for hybrid cars, a fuel cell and nanomaterials for better energy storage in batteries. This single-digit stock is the kind of thing speculators jump on when oil prices spike.
Cramer did offer a couple of solid reasons to go with Ener1, though. The company's joint venture with Delphi has plans to sell prototype batteries to a Norwegian electric-car maker. This could put some steady business on Ener1’s books. There’s also the potential for the company to deliver lithium-ion batteries to the U.S. auto industry, finally making it competitive with Japan. Ener1 has absolutely no analyst coverage, so again there’s plenty of potential for this stock to jump.
Let us reiterate our usual warnings for speculation trading: Do your homework. Wait to buy. Use limit orders. Purchase in small increments.
"You don’t want to end up paying through the nose," Cramer said, "because you placed a big market order.”
Questions for Cramer? firstname.lastname@example.org
Questions, comments, suggestions for the Mad Money website? email@example.com