Boeing and BMW Join Forces for the Carbon Fiber Revolution

CHEAT SHEET Analysis: Is Carbon Fiber a Good Bandwagon to Jump On?

“Look for continued strength in wind and aerospace, and growth in automotive,” reads the headline coming out of the annual Carbon Fiber conference hosted by CompositesWorld. The organization expects total demand for carbon fiber to increase over 58 percent by 2016, and over 160 percent by 2022.

Is carbon fiber a good bandwagon to jump on? The short answer is: yes. One of the core components of our CHEAT SHEET investing framework explains that companies riding macro trends tend to outperform those that don’t. Think of the investing proverb, “A rising tide raises all boats.” Carbon fiber composites are expected to be used ubiquitously in manufacturing, as soon as automation technology advances and costs come down.

The National Highway Traffic Safety Administration announced at the end of August that the fuel economy standard for model-year 2025 will be 54.5 miles per gallon. This new standard — called the Corporate Average Fuel Economy standard — has more than just BMW scoping out composite materials. Ford Motor Co. (NYSE:F), General Motors Company (NYSE:GM), and Caterpillar Inc. (NYSE:CAT) have all received development awards from the U.S. Energy Department to investigate alternative, light-weight manufacturing materials.

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