Polypore International (NYSE: PPO ) , a Charlotte, N.C.-based filter technology specialist, makes parts for use in batteries that help run things such as tablets, smartphones, and electric-drive vehicles (EDVs). To the savvy investor, 2011 may very well have become a turning point for growth in this company. During the first half of the year, investors seemed to be on board, but that optimism later turned sour. Here's why.
Polypore started things out strong with back-to-back earnings announcements that smashed expectations. Though management never gave specific outlooks, it repeatedly cited increased demand for the company's products as reason to view the future optimistically.
During the first half of the year, that was music to investors' ears.
But then in August, things started to head south. Even though the company recorded an eye-popping 85% increase year over year, investors didn't like what they heard moving forward.
To Fool contributor Neha Chamaria, that reaction seemed silly. The main reason the company told investors to temper their short-term outlook was a good one: IT would be spending money to expand its capacity to meet customer demand.
With battery companies such as Exide Technologies (Nasdaq: XIDE ) and EnerSys (NYSE: ENS ) demanding more of what Polypore has to offer, the company has no choice but to spend the money to expand if it wants to meet demand. And if EDVs ever take off from the likes of Tesla (Nasdaq: TSLA ) or even Ford (NYSE: F ) , the future could prove even more lucrative for Polypore and make this buildout look even more prescient.
So even though the company finished 2011 on a down note, I believe Polypore could have a bright future.
2012 and beyond
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