We all know the importance of Lithium-ion (Li-ion) batteries and how they can be used in a wide variety of fields. But the uses we have discovered until now are just a fraction what Li-ion batteries are capable of.
This is the reason why Tesla Motors (NASDAQ: TSLA) has decided to build a Gigafactory worth $5 billion in an attempt to manufacture its own Li-ion batteries which will help meet the company’s requirements in the future. This step taken by Tesla has thrown light on how important this energy storage device can be for generations to come.
Before advising you to buy stock dividends from companies that manufacture such an important electronic device, we need to understand some of its uses first…
Li-ion batteries are popularly used in electric cars, which are said to be the future of automobile industry. These batteries are being used at large by big automobile companies such as General Motors (NYSE:GM), Ford (NYSE:F), BMW (FRA:BMW), Navistar (NYSE:NAV), Daimler (FRA:DAI) and many more. Li-ion batteries are also being used on a large scale in mobiles, drones, laptops, aerospace as well as defense sectors.
Once Tesla’s Gigafactory is completed, the company will be the biggest manufacturer of Li-ion batteries. However, it will take at least one more year for the factory to start production. Meanwhile, keeping the importance of these batteries in mind, we will now have a look at two of the best companies which already started manufacturing Li-ion batteries and which have great growth prospects.
Arotech operates in two business segments – battery and power systems, which manufacture Li-ion and as Zinc-air batteries. It also manufactures smart chargers and supplies them to military and defense in Asia, Europe and Middle East.
Arotech stocks over the past one year have earned 115% in profits and its average earnings stand at a whopping 156%. Its overall VGM (“V” for Value, “G” for Growth and “M” for Momentum) score is “B”. Though it is a small company having a market capital of just about $83.28 million, the rate at which it is growing can prove to be a boon to the investors.
With a 1.29 price-to-book ratio, Arotech, as of now, is selling at a low price compared to the industry average ratio of 1.79. As far as its cash flow and earnings per share are concerned, the company has recorded historic numbers of 27.75% and 40% respectively, which are much better compared to the industry average of 4.91% and 11.69%. Hence, it might be a good idea to add some its stocks to your portfolio without any further delay.
Johnson Controls (NYSE: JCI): Johnson Controls is a big player in the automotive industry as far as automobile interiors and batteries are concerned. It also supplies control systems along with facility and energy management systems for non-residential buildings.
The company provides Li-ion batteries for wide variety of electric vehicles which include hybrid electric vehicles (HEVs), plug-in hybrid vehicles (PHEVs), advanced start-stop vehicles and micro hybrid vehicles.
Johnson Controls’ dividend stocks are rated a “strong buy” by Zacks (Rank #1). The company reported earnings of 1.3%, on an average, for four consecutive quarters. It is estimated by Zacks that for the current quarter which ended in September, each share will be earning a profit of $1.18 representing growth of 84.74% on a yearly basis, while for the current quarter this growth is expected to be an unbelievable 287.21%.
With 10.26 price-to-earnings ratio, Johnson Controls, as of now, is selling at a low price compared to the industry average ratio of 16.23. It has a 0.74 price-to-sales ratio and its PEG is currently standing at 0.82. It has recorded an earnings per share growth of whopping 7.34%. With nothing to lose in the near future, the stocks of Johnson Controls are worth buying.
A bit more…
Automobile and consumer goods sector are the major consumers of Li-ion batteries and it is expected that the business is going to double and reach $22.5 billion by the end of this year (Globally, Li-ion batteries had a market share of $11.7 billion in the year 2012).
The share of Li-ion batteries in the automobile field is expected to increase from 14% to 25% in the same time span (The aforementioned statistics were extracted from analytical data supplied by Frost & Sullivan).