What do you do when you hold something extremely valuable in your hand, but no one wants it because it’s too pricey? You look for ways to reduce the cost, of course. This will make companies that avoided it before want to buy it in large numbers now.
But it’s not always easy to reduce cost. That is what’s going on with the graphene industry, and investors are trying to avoid the slippery slope.
What is Graphene?
Graphene is a type of carbon in crystalline form. The atoms form a hexagon, and due to the shape, the material is strong, light, and transparent. It’s also a good conductor of heat and electricity.
With these properties, graphene could be used in many industries. There’s just a couple of problems.
It’s difficult to produce it in mass quantities.
It’s extremely expensive.
But companies have splurged on the material, and they’re using it for a variety of technological advancements, including:
Water filtration and desalination
Where Graphene is Going
With its numerous uses, researchers have been working hard to find the best application for graphene. So far, they’ve found it’s a good conductor for dye-sensitization, organic solar cells, and silicon nanostructures. They continue to try to find a way to produce the metal roll-to-roll, which will be able to meet the demands if they are ever able to reduce the cost.
A square inch of graphene on copper foil costs $60 in some instances. No one wants to pay that much. It would have to be as low as $1 per square inch for many companies to consider it a viable option, as Kenneth Teo, director at Cambridge unit of Germany’s Aixtron SE, told Forbes.
Again, it’s not only the cost – it’s the ability to produce the material in the quantities companies require. Lockhead Martin (NYSE: LMT) is using graphene in nanopore-based water filters, and the problem is the same – production. Lockhead Martin doesn’t believe it will be able to commercialize its technology until 2014 or 2015.
But while Lockhead Martin is projecting 2015, Frank Morris, co-founder of Ecologic Advisors, believes it’s even further into the future. He told Forbes it would be at least three years.
The technology sector seems to be picking up graphene a little more quickly, as these companies wouldn’t need as much graphene for their products. In 2010, graphene production was around 28 tonnes, but by 2017, it’s estimated this figure would increase to 573 tonnes, according to Nanowerk.
To meet the increasing demand, researchers at Research Foundation of Stony Brook University and Graphene Laboratories have been working on a way to create the material from natural flaky graphite. This would overcome the challenge of producing a large quantity for a low cost.
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Is Graphene a Good Investment?
Graphene production is in the works, and it looks like companies are expecting results within the next couple years. If you’re looking to invest in the industry, your best bet may be to watch companies that are working with it. It’s going to be a few years before they are able to use it to the scale that will start to generate a hefty return, but research facilities are making strides.
Some of the companies you may want to look into are:
EnerSys (NYSE: ENS)
Tesla Motors (NASDAQ: TSLA)
Johnson Controls (NYSE: JCI)
If you want to invest in larger companies that will use the material in the near future in a larger capacity, look towards the technology industry and companies like Nokia (NYSE: NOK), IBM (NYSE: IBM), and Samsung (KSE: 005930). You should also be keeping an eye on the miners – such as Lomiko Metals (TSX-V: LMR), which is working with Graphene Laboratories – that will be supplying these companies.
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