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Who Will Follow Valence Technology's Lead?

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As the market starts to come around on commercial fleet electric vehicles, Valence Technology (Nasdaq: VLNC  ) is rewarding shareholders who looked past flashier stocks. Valence doesn't have a big flashy deal with Fisker, like A123 Systems (Nasdaq: AONE  ) , or with Volvo, like Ener1 (Nasdaq: HEV  ) , but it is riding the success of little-known Smith Electric's commercial vehicles.

Valence is out in front right now because it is focusing on commercial vehicles, while A123 Systems and Ener1 are building capacity for commercial vehicles, passenger cars, and electric grid projects. They're spread thinner, so the financial results will come more slowly as a range of products launch. That's not necessarily the wrong strategy, but results will take much longer to materialize and there are risks with a larger infrastructure.

If Smith is helping drive Valence higher, can A123 and Ener1 be far behind? Both have major commercial vehicle partners that should help results as commercial fleets electrify, and the market is just waiting to see some big results from these two battery makers.


Commercial Vehicle Partners


Smith Electric

A123 Systems

Navistar, Eaton


AC Transits, Japanese Postal

Valence looks like it is taking the initial lead out of the gate, but I expect both A123 and Ener1 to catch up early next year. The question is if their stocks will be far behind? In the past six months, Valence's stock is up 160%, while A123 and Ener1 have only moved up slightly.

Valence has even beaten Advanced Battery Technologies (Nasdaq: ABAT  ) , the only profitable company in the sector, which has seen its stock rise 18.7% in the past six months.

Like any race, the fast starter doesn't always win, but it doesn't hurt to jump out early. By the end of 2011, investors will know which battery market is taking hold and who will be plagued by delays and disappointment. Who do you think will win this battery race? Let your fellow Fools know using the comments section below.

Interested in reading more about Valence Technology? Click here to add it to My Watchlist, and My Watchlist will find all of our Foolish analysis on this stock.

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Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.

Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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