Battery Tech: A Breakout Is Imminent
Battery technology is slowly changing the consumer landscape.
We can now purchase cars made by Tesla Motors Inc (NASDAQ:TSLA) that are powered by battery tech. This phenomenon seemed obscene only 10 years ago. As society moves toward cleaner energy and away from fossil fuels, the demand for batteries and battery technology will only increase.
Society is quickly becoming addicted to socially interacting using the latest technologies. These technologies are dependant on battery technology, and it is growing at an exponential rate. The social media revolution in our daily lives encompasses walking around, staring at smartphones that are powered by battery tech.
These devices are continually demanding more power, so companies are actively seeking ways to build a more efficient and longer-lasting power source. Battery technology will fuel our future, and presents a great investment theme.
Profit From the Battery Technology Boom
EnerSys (NYSE:ENS) is a global leader in stored energy applications for the industrial space. Its product power segments include aerospace, defense, industrial vehicles, medical equipment, telecom, and the list goes on. If investing in battery tech is your goal, this name should not be overlooked. EnerSys has been manufacturing industrial batteries for over 100 years. I can only assume that with a track record of this duration, the company knows what it is doing.
There are a number of reasons why I like this company, and the hype surrounding the sector is not one of them. I use charts as my basis of investing because it keeps my process of deploying my hard-earned money to acquire potentially profitable assets systematic. This allows me as an investor to keep my emotions at bay because, as I have learned, my emotions are my worst enemy.
The following chart illustrates the primary reason why I like this investment.
Chart courtesy of StockCharts.com
ENS stock is attempting to break above a horizontal resistance line that has stood for over 2.5 years. A break above this level would equate to an all-time high. EnerSys stock is now attempting for the third time to break above this significant level. The longer a lever of resistance stands, the more significant a break becomes. If ENS stock can break above this level, resistance will become support and the path of least resistance will be higher.
A breakout above the resistance line will also mark an all-time high for EnerSys stock. An all-time high in a stock price is a significant event because everybody who has ever purchased the following investment in their investment account is now sitting with a gain. Investors who are up on their position are less likely to sell, and have an increased willingness to hold onto their position. This phenomenon creates an environment where no overhead resistance exists and the stock is free to move higher.
At the bottom of the chart, I focused on the on-balance volume (OBV) indicator. This indicator uses volume to compute buying and selling pressure. It is produced by cumulatively adding volume on up-days and subtracting volume on down-days. The data is then plotted on a chart to identify a trend. This indicator is used as the leading indicator, as well as to confirm the price trend.
The OBV indicator has marked a new all-time high, and this money flow indicator is signalling that buyers are actively accumulating the position in anticipation of a break higher.
If a breakout does occur, this pattern can be used to set a potential price objective. The process involves projecting the lowest point of the consolidation above the horizontal resistance. I come up with a price objective of $102.00, which represents a 40% return from current levels. From a risk-vs.-return perspective, a proper investment strategy can be built around this price pattern.
The Bottom Line on Battery Tech
Battery technology has been around for some time, and there are companies like EnerSys that have been doing a successful job of manufacturing and distributing this sought-after battery tech. The charts are lining up to produce a bullish outcome and I like this company as a bullish play.
ENS stock is not the only name in the alternative energy space. If this sector is intriguing, I really suggest you check out this recent report that our top tech editor just released: “17 Million Drivers No Longer Pay for Gas?” Click here now for the report.