Invest in Graphene with GrafTech International (NYSE: GTI)

by Mike Kapsch

Invest in Graphene with GrafTech International (NYSE: GTI)

What you’re about to discover could revolutionize everything from electronics and aerospace to transportation and energy.

It’s the thinnest, strongest material on earth. And in 2010, it won Andre Geim and Konstantin Novoselov, two scientists from the University of Manchester in England, the Nobel Prize in Physics.

This potentially game-changing material is none other than graphene.

The Highlights

In its most basic form, graphene is simply a single layer of graphite. It’s as thin as one atom.

Yet amazingly, The New York Times says, “...a sheet of it stretched over a cup of coffee could support the weight of a truck bearing down on a pencil.”

That’s not all that graphene has to offer, either...

  • Graphene is also the world’s first two-dimensional material.

  • It’s the lightest material in existence.

  • It has the best thermal conductivity of any material, which could lead it to replace copper in computer chips.

  • Graphene is the most impermeable material ever discovered.

  • It’s a very efficient electrical conductor that could also replace most uses of silicon in addition to copper.

  • It carries the highest intrinsic mobility of any other material on earth, which is set to pave the way for faster, more efficient transistors and other various electronic components and devices.

  • It’s transparent and completely bendable, potentially creating a brand new slew of tablets, smartphones, computers, printers, chips and much more.

If you’d like to learn even more about graphene, I found the video below well worth the watch.

Despite its promising characteristics though, there are certainly challenges.

The Roadblocks

One issue is that China currently supplies 80% of the world’s graphite supply. This could lead to price fixing on graphite and graphene in the future.

Another issue, and currently the biggest, is figuring out a way to move graphene from the research lab to the marketplace. That’s because no company has figured out a way to really manufacture it on a major scale yet. It’ll definitely be a few years before we can tell how marketable graphene is.

But a handful of companies are preparing to industrialize it. Some of them even trade right on the NYSE. And early-in investors could be in for the ride of a lifetime if graphene becomes the next big thing.

In fact, investment banking firm Jefferies Group (NYSE: JEF) even says one firm in particular is worth checking out at current levels: GrafTech International Ltd. (NYSE: GTI).

A Buying Opportunity?

Based out of Ohio, GrafTech is a company with 125 years of experience in the carbon and graphite industries.

In the late 1800s, it actually supplied arc carbons to Cleveland, Ohio, enabling the city to become the first in the world with electric street lamps.

Today, GrafTech’s products are used in a variety of industries including steel, energy, technology, chemicals, aerospace and transportation.

The company does business in over 70 countries, with operations spanning four continents. It has 19 strategically located manufacturing facilities and Jefferies expects the stock to gain 50% from current prices under $12/share.

But with the emergence of a potentially disruptive material such as graphene, this could be just the beginning of a massive run higher.

That’s because GrafTech is also the twelfth-largest patent holder for applications in the field of graphene. It currently holds even more patents for graphene applications than big name companies like General Electric (NYSE: GE), Bayer AG (ETR: BAYN) (FRA: BAYN) and Canon (NYSE: CAJ).

In 2011, sales hit a record high of $1.3 billion. The company is also in its eighth straight year of positive cash flow. And the future looks very bright.

It expects double-digit growth in the next three to five years in a number of key markets including...

  • Electronics... 30%
  • Aviation and transportation... 15%
  • Lubricants, coatings and additives... 10%
  • Lighting... 30%
  • High-temp furnaces... 20%
  • Energy storage... 20%

You can bet graphene is going to play more and more of a role in these markets, too. Those who produce graphite and graphene, like GrafTech, will see demand increase for their products as more and more people discover the extraordinary potential of graphene.

Good Investing,

Mike Kapsch

comments powered by Disqus