I hate it when this happens. A high-profile short names a stock as his/her pick for the next big short. And then we get just enough bad news to leverage that pick into panic selling.

That’s pretty much what happened yesterday, January 31, to shares of Polypore International (PPO), a member of my Jubak’s Picks portfolio http://jubakpicks.com/the-jubak-picks/ The shares finished down almost 30% today (a drop of $16.26 a share) on volume of more than 26 million shares. Average daily volume for Polypore is about 960,000 shares.

The story of this rout begins on Monday, January 30 with a call by Gordon Johnson, an analyst at Axiom Capital. to short Polypore. The target price for the stock, then trading at $54.34, was an eye-popping $26 a share. Johnson and Axiom had previously been very vocal on shorting thin-film solar panel producer First Solar (FSLR). That call has been very profitable in the global collapse of solar stocks. Online news sources such as TheStreet.com picked up Axiom’s call. The Street’s story was headlined “The next great alternative energy short is…”

I understand the basis of Axiom’s call—although I disagree profoundly. Read more

Buy Polypore International (PPO)

I’m adding shares of Polypore International (PPO) to my Jubak’s Picks portfolio http://jubakpicks.com/the-jubak-picks/ today.

Shares of Polypore International got hammered by the scare about the danger of fire in the batteries of General Motors’s (GM) Chevy Volt.

That’s totally understandable. Ion exchange membranes for lithium batteries used in portable electronics and electric-drive vehicles make up about 24% of the company’s sales over the last four quarters. (Separators for traditional lead batteries make up about 50% of sales.) And separators for electric cars are by far the biggest opportunity ahead of Polypore International. The company estimates that an increase in the electric car share of the global vehicles market to 5% from less than 3% today would double the demand for ion exchange membranes for lithium batteries.

Anything that threatens to slow that growth rate is therefore a big deal for Polypore International. And the news at the end of November that the National Highway Traffic Safety Administration had launched an investigation into battery fires in the Chevy Volt certainly qualified as big news. Shares of Polypore International, which hadn’t exactly been tearing up the track anyway, fell from $51.95 on November 28 to a low of $43.18 on January 4, 2012.

But in recent days the shares have rallied back to $52.32 as of 2:00 p.m. New York time today, January 12, and in the process have moved back above their 50-day moving average. Next resistance is at $52.85 (the 200-day moving average) and then $55 (the gap in late November.)

So what’s happened to turn the shares around? Read more

Batteries, yep good old batteries, are the technology of tomorrow. Here’s how to invest

It’s 1967.  In “The Graduate” the experienced Mr. McGuire leans over to whisper advice to the very inexperienced Benjamin. (Played by a very young Dustin Hoffman.)

“I want to say one word to you. Just one word.”

“Yes, sir,” replies the ever polite Benjamin.

“Are you listening?” continues McGuire.

“Yes, I am,” Benjamin assures him.

“Plastics.”

“Just how do you mean that, sir?” asks the completely dumbfounded Benjamin.

Write that same scene today and McGuire would whisper, “Batteries.”

Especially if he was a savvy investor who followed the trends in the global auto industry.

You’ve undoubtedly read the stories about General Motors’ (GM) electric car, the Chevy Volt, scheduled to go on sale in 2010. That car, with its $40,000 price tag and its 230-miles-per-gallon mileage rating from the Environmental Protection Agency is either a gimmick designed to convince the U.S. consumer and the Obama administration that the company has turned over a new leaf or a real portent of how much things have changed in Detroit.

Whichever it is, the Volt is only one drop in a wave of hybrid electric and plug-in electric cars that is going to wash over the global auto market in the next two decades. In June 2008 Deutsche Bank counted 75 new hybrid electric models set for sale by 2011. And the number has only gone up since then. The National Highway Traffic Safety Administration projects that hybrid cars could take as much as 20% of the U.S. auto market by 2015, up from just 2% in 2007. In Europe, according to J.D. Power, hybrids and electric cars could account for 50% of the market by 2015, up from 2% in 2007.

And every one of those hybrid and electric cars will need a rechargeable battery. Most of those new batteries will be lithium ion batteries. The automotive market for lithium ion batteries is close to zilch today. Hybrids like Toyota’s Prius run on older nickel metal hydride battery technology. (Conventional car batteries use a lead- based technology.) But lithium-ion technology with its lighter weight and greater ability to stand up to recharging after being completely discharged is the likely technology of the future.

From just about zero now, Deutsche Bank estimates that the automotive market for lithium ion batteries will hit $10 billion to $15 billion in sales by 2010. (The entire market for lithium batteries in things like rechargeable phones and laptop computers was $7 billion in 2007.) By 2020, when the bank projects that lithium ion technology would have just about completely replaced nickel metal hydride technology in cars, the automotive market for lithium ion batteries could reach $30 billion to $40 billion annually.

But just how do you invest in this coming wave of automotive lithium-ion batteries?

All up and down the battery food chain from the companies that mine lithium to the companies that make the key pieces that form the guts of the batteries to the battery makers themselves. Read more