Presidents Day Sale: 12 Unbeatable Trades at Sale Prices

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Enersys (ENS)

In the Right Place at the Right Time

By Tobin Smith

While there are any number of provisions in the American Recovery and Reinvestment Act of 2009 that has the population and some politicians up in arms, the planned federal incentives for the battery sector seem to have broad support and are not likely to change much.

As of Friday afternoon, the U.S. Senate's version of the legislation included the following provisions that may directly impact the renewable energy sector:

• $14.4 billion for "Energy Efficiency and Renewable Energy"
• $2 billion for grants for the manufacturing of advanced batteries and components
• $4.5 billion for "Electricity Delivery and Energy Reliability"
• $600 million for "capital expenditures and necessary expenses of acquiring motor vehicles with higher fuel economy, including: hybrid vehicles; neighborhood electric vehicles; electric vehicles; and commercially-available, plug-in hybrid vehicles"
  
  

One of the only real companies in this game is Enersys (ENS). They have the size and scope to acquire key technologies in this field and make big sales into the battery needs right now.

The $2 billion in grants for domestic battery manufacturing is immense. Grid-based energy storage may also qualify for a portion of the $4.5 billion earmarked for "Electricity Delivery and Energy Reliability."

If you assume that batteries and associated control systems will probably represent one-quarter to one-third of the $600 million electric vehicle acquisition appropriation and recognizes that there will be substantial pressure to ensure the funds are spent on domestically manufactured batteries, the impact on a handful of stocks like Enersys could be immense.

Enersys is a great Presidents Day buy. At four-times cash flow, ENS will be a $10 to $12 stock as the spending wave starts to hit the energy storage biz.

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