I’ve been looking for an exit on Maxwell Technologies (MXWL) for a couple of weeks now. I was hoping for something closer to $18, but after repeated drops to $14.95 (on December 19) and $14.77 (on December 14), the $16.09 close on December 21 looks to be about as good as I’m going to get in a market that isn’t treating anything that smacks of technology or China any too kindly. As of December 22, I’m selling Maxwell Technologies out of my Jubak’s Picks portfolio http://jubakpicks.com/the-jubak-picks/ with a gain of 28% since I added it to the portfolio on January 23, 2007.

Why sell Maxwell now?

Maxwell’s bright future is built (mostly) around its ultracapacitors. These energy storage devices can store and then release energy faster than a battery and operate more efficiently than batteries under unfavorable conditions such as low temperatures. They’re winning greater and greater acceptance in the market for uninterruptible power supplies on wind turbines (you have to keep those blades pitched correctly all the time or winds can damage the turbine), on hybrid buses, and in stop-start systems for cars and trucks that improve fuel efficiency and reduce emissions by turning off and then restarting engines when the car slows or stops.

Getting ultracapacitor technology into turbines, buses and cars is a long process. Maxwell calculates that getting its product qualified by PSA Peugeot Citroen, the second biggest carmaker in Europe, took about four years. (Subsequently qualifications by other automakers would take less time because they would be able to see the results from PSA Peugeot Citroen, the company estimates. In its third-quarter conference call with analysts the company said it expected another major qualification about 15 months from November 2011.) Now, however, product orders are starting to ramp with the company estimating that 300,000 cars using its ultracapacitor product will be on the road by the end of 2011 and 1 million by the end of 2012. European Union rules require that 65% of cars produced in Europe next year reduce CO2 emissions to a level equal to fuel efficiency of 42 miles per gallon (if they use gasoline) and 48 miles per gallon for diesel. Stop-start systems can reduce fuel consumption by about 15% in urban driving.

I don’t have any doubts about the eventual market for stop-start systems—or about the advantages of ultracapacitor-based systems since they provide greater reliability in cold weather and allow automakers to use small batteries in their cars.

My problem is timing. Read more

Update Maxwell Technologies (MXWL)

It looks like Maxwell Technologies (MXWL) is making a successful transition to a company built around its newer ultracapacitor BOOSTCap products. In a June 22 post on the company I wrote that 2010 marked a very important transition for the company. Maxwell really runs two businesses. One business is composed of the older microelectronics (radiation hardened components and computers for use in space) and transmission (capacitors used in high-voltage electrical transmission lines) product lines. Back in 2006 these product lines accounted for two-thirds of the company’s sales. The other business is composed of the company’s ultracapacitor BOOSTCap products. These fast-charge, fast-discharge energy storage devices are gradually winning design competitions and getting built into products from auto, truck, and bus electrical systems to wind turbines. In the first quarter of 2010 sales from the BOOSTCAP business finally exceeded sales from the microelectronics and transmission business. In the long-term, I wrote, this transition is exactly what investors want to see since BOOSTCap revenues are projected by Needham to grow by 52% from 2010 to 2011. But in the short term, the transition could be tough on the company because one of Maxwell’s biggest customers for the BOOSTCap product is the depressed global auto industry.

Well, second quarter results reported on July 29 and news from the company since then say that transition is going well. Read more

Update Maxwell Technologies (MXWL)

So how do you miss earnings estimates by 36 cents a share, reporting as Maxwell Technologies (MXL) did on February 18 after the stock market closed a loss of 39 cents a share for the fourth quarter, and yet miss revenue projections of $28.8 million by just $800,000? (Revenue actually grew by 22.3% from the fourth quarter of 2008.)

Part of the reason is that Maxwell had a large number of non-cash losses (including a big set-aside against the results of an investigation into a former sales agent in China) and gains this quarter. Using GAAP accounting (Generally Accepted Accounting Principles) the company lost 39 cents a share in the period. Excluding those non-cash gains and losses, the company broke even for the quarter. Wall Street had projected a loss of 3 cents a share.

But more importantly for long-term investors, the quarter’s results reflect that Maxwell is still essentially two companies. Read more

Update Maxwell Technologies (MXWL)

I hate it when this happens: A perfectly good growth stock gets adopted by momentum investors. It soars in the days before the company issues earnings on the hope that the good news already in the stock price will turn into great news in the quarterly report. When it doesn’t, the stock crashes as momentum investors move on. Unfortunately, this could also scare growth investors into selling when they should be hanging on or even buying more. (For coping with this twitch-inducing market see my November 20 post http://jubakpicks.com/2009/11/20/nervous-afraid-to-stay-in-but-scared-to-get-out-join-the-club-and-read-my-three-strategies-for-coping/ )

That’s exactly the story of Maxwell Technologies (MXWL) in the last month or so. The stock rocketed from $15.85 on September 21 to $21.53 on October 19 and then, after disappointing quarterly earnings, sank back toward those September numbers. On November 30, the stock traded at $16.44.

  Were the third quarter numbers so bad that they damaged the long-term growth story? Disappointing in the short-term, sure, but from a long-term perspective I’d actually call them encouraging. Read more

Update Maxwell Technologies (MXWL)

I’m going to keep Maxwell Technologies (MXWL) in my Jubak’s Picks portfolio. Just when the stock hit my $18 target price (a little early since that was the target for March 2010), the company announced a huge win in the automotive market. So I’m raising my target price with this update. Read more