Ener1- Lithium Ion Batteries: Buy, Sell or Hold?

Lithium Ion Batteries are hot right now.� This is reflected in the huge fourth-quarter and full-year results of Ener1 (NYSE: HEV). Ener1 is a lithium ion battery designer, developer and manufacturer in the United States.� Founded in 1985, it operates in three segments: battery, fuel cell and nanotechnology. The battery segment offers lithium-ion batteries for hybrid, plug-in hybrid and electric vehicles, as well as for buses, trucks and other alternative transportation vehicles. This segment also provides battery cells and battery packs. The fuel cell segment develops and markets fuel cells and fuel cell systems. The nanotechnology segment engages in developing nanotechnology related manufacturing processes and materials. The company offers its products to customers in the transportation, stationary power, military and small cell markets.

There is no question that lithium ion technology holds tremendous promise for the future.� They have many advantageous over traditional batteries namely weight (they are much lighter), no memory effect and a very slow discharge rate.� These beneficial features make lithium ion batteries perfect for electronic equipments and electric vehicles.

Ener1 blew analysts away with its fourth-quarter and full-year results sending shares spiraling higher.� Net sales were $33.1 million in the year’s final quarter, an increase of 202% over net sales of $11.0 million in the fourth quarter of 2009. �For fiscal year 2010, net sales were $77.4 million, an increase of 122% over net sales of $34.8 million for 2009. �Gross profit margin improved to 25.8% in the fourth quarter of 2010, up from 9.8% in the fourth quarter of 2009. �For the full year, gross profit margin increased to 17.9% from 11.7% in 2009.� The company is extremely enthusiastic about 2011, stating the need for its products is urgent.� This truly appears to be an honest, non hyperbole assessment of the market and Ener1′s role in it.

Let’s take a closer look at the technical picture.� The stock has been downtrending into the earnings announcement where price rocketed higher to the 200-day moving average at $3.67 per share.� A bullish 50/200 day crossover is about to occur on the daily chart.� Savvy traders will watch the $3.70 level for break outs triggering technical long entries.