Louis Navellier is again astride two horses that have driven his marketing for much of this year: Alternative energy, and the election.

He’s telling us that he has a pick for his Emerging Growth newsletter that will benefit greatly from the presumed Obama presidency, largely because of the dramatic funding that should come through for alternative energy early next year (or perhaps, as he intimates, even in the lame duck session of this Congress).

This is a common argument these days — and some of the alternative energy stocks have gotten a bit of a boost lately, specifically the solar stocks that got a little optimism from Congressional passage of extended and improved clean energy tax credits. Still, even with that long-term good news, the fall of oil and the crash of the market have kept most of these names far, far off their highs. Most solar companies now trade at far lower PE ratios than they have ever seen before — but of course, you could say much the same thing about many stocks in this market, even after yesterday’s pleasant bounce.

And generally speaking, it does make sense — Obama and McCain are both committed to reducing reliance on imported oil, and both have backed initiatives that are designed to increase the use of “green” energy and fight global warming. Obama has specifically focused on alternative energy as an area where he wants to invest and create new jobs and a larger industry, so the overall theme makes sense.

But what stock is Navellier talking about, specifically? He won’t tell you, of course, not without your cash — and his publisher has gotten pretty aggressive lately, this is usually an expensive newsletter at $1,000 a year, but he’s trying to tempt people with a $99 offer.

The Gumshoe offer, of course, remains the same as it ever was: I’ll tell you what he’s hiding and get you started on your research, and you owe me nothing (though of course, support from the Irregulars is always welcome).

First, we need to get you excited about this idea — here’s Navellier’s language:

“A few weeks ago, Warren Buffett quietly put $230 million into a Chinese battery company. In November, we’ll see an IPO for a rechargeable battery company called A123 Systems.

“What we’re seeing here, my friend, is a $20 billion business flexing its muscles to leap up to $100 billion.

“Think about this. In solar, stocks are valued at 6 times sales. In rechargeables, stocks are currently valued at 0.25 times sales!

“This is an incredible opportunity. And Navellier Research has identified a fast five-bagger in this sector.
You have 7 days to establish your position.”

Keep in mind that the investment in Chinese battery maker and automobile company BYD was made by Berkshire’s Mid-American Energy subsidiary and its Chairman David Sokol, and was not necessarily a company selected by Buffett. Still, Mid-American has done very well, too, and I doubt Buffett would object much to anything they wanted to buy — they’ve been very active this year, including the “rescue” purchase of Constellation Energy (not yet closed). And Sokol is often rumored to be one part of the potential three-headed CEO that will replace Buffett at Berkshire if he ever retires or passes on to his eternal whatever, he’s certainly no dummy.

But to get the specific company we need some clues. And as always, Louis provides:

“The best of breed in rechargeables has already pretty much cornered the market for the power packs used in forklifts and backup systems used in the telecommunications and utility industries. Another big area is auxiliary power for submarines.

“With the collapse in commodity prices, material costs—especially lead—are declining, and margins are expanding from 20% to 25%. Sales for the most recent quarter are up 41% on the year, net income doubled and guidance was raised.

“All of which was ignored, of course, because of that ghastly crunching noise coming from Wall Street.
As a classic growth stock, our rechargeable simply got trampled in the Crash of ’08. It plunged from $37 (an all-time high) to $11 (a three-year low) in a matter of weeks ….

“On Wednesday, November 5 … our rechargeable company will report earnings. Analysts expect a 45% improvement over last year’s 35 cents.

“In the current wild environment, I understand why analysts are cautious. But I recall last November’s blowout report, which sent the stock up 55% in 7 weeks—and I believe this year’s environment will be even more receptive to ‘new energy’ initiatives.”

So what is this company that Navellier teases?

The Thinkolator genuinely appreciates the relative surfeit of redundant chatterboxing from Navellier, who tends to be much more terse than his colleagues at the Motley Fool, for example, and that allows for a quick answer … this is …

EnerSys (ENS)

Enersys did earn 35 cents a share a year ago, they do report on November 5 in the pre-market hours, and analysts are guessing that their earnings will hit 51 cents, which is indeed almost exactly a 45% growth rate.

They are also a dominant industrial battery concern, one that has seen its share price fall from $30+ to today’s price of about $12. I first saw this email from Navellier yesterday afternoon, and it got at least a little attention from investors — or at least I would presume that it did, since the shares had a big spike at the open this morning. That might not all be from Navellier’s campaign, however, since the company announced a near-$20 million buyback late yesterday (that’s about 3% of the company, which has a market capitalization of about $600 million), and they added a new analyst on Monday who launched coverage with a “buy” rating.

If this were a normal market, the shares of EnerSys would probably never have reached this level — but of course, you could say that about hundreds of companies right now. They carry a fair amount of debt but not necessarily a worrisome amount, and they’ve shown significant growth in both earnings and sales over the past year, yet they trade at a trailing PE of around 7 and a forward PE of about 4. Not the kinds of numbers you usually see on a Navellier pick, since his momentum growth companies tend to be expensive relative to the market, but things have fallen so far now that almost everyone who’s willing to buy anything looks like a value investor. The stock has more or less matched the performance of the S&P 500 over the past year, but that obscures the fact that they were dramatically outperforming the market until about two months ago, when they began their 60% decline.

EnerSys has been catching investors’ attention for the last couple months as a cheap and growing buy in green energy, last month Forbes Growth Investor touted the stock and the company announced some new batteries that focus on the alternative energy sector. They’ve also been expanding their production base, particularly for the old fashioned (and cheap) lead batteries that still do the yeoman’s work in energy storage around the world.

The company is only about ten years old, but appears to have a nice solid business in both motive batteries (like for the forklifts and other industrial machines) and backup and reserve power (for telecom installations and others who require uninterruptible power).

For a fairly small company it’s slightly surprising to see the very low levels of insider ownership, and there was a significant insider sell recently, but that’s not necessarily a reason to dislike the company.

I did take a look at one recent analyst report, from William Blair last month, and they were then (with the shares around $20) arguing that EnerSys should see a dip in revenues with the declining overall economic picture, and that they would be hurt somewhat by falling lead prices on their pass-through contracts, but that overall their earnings should continue to climb and that the shares were still a reasonably priced buy that should outperform. Since then the shares are down 40% and pessimism about the world economy has certainly grown, but clearly Navellier is not alone in finding this company a compelling growth candidate.

That doesn’t mean that they will outperform when they release earnings next week, or that they won’t say something bad about their 2009 prospects that causes investors to fret, but with a fairly basic business that will not disappear overnight, even if it does suffer, it’s at least hard to argue that EnerSys is overvalued. Whether it’s a good buy or not right now is, of course, your call.