In the late 1800’s, a man was looking for a material with the ability to withstand intense heat. He took filaments of bamboo and baked them at a very high temperature in a controlled atmosphere. Through this process, called pyrolysis, the bamboo filaments became fire resistant and able to withstand extreme heat. The man’s name was Thomas Edison, and he was searching for the filament needed to create the incandescent lightbulb.Fast forward 120 years or so, and chances are you own something that utilizes nearly the same technology: a tennis racket, a bicycle, or for the younger crowd, a car hood or spoiler. I am talking about carbon fiber.

Today we use a petroleum product instead of bamboo or cotton, but the process remains virtually unchanged. And with technological advances, the future of carbon fiber is astounding.

Carbon fiber, with a higher tensile strength than steel, will soon become the material of choice for almost everything you can imagine. But I want to focus on two huge growth opportunities that I believe will push carbon fiber to the forefront.

The first is the automotive industry. Carbon fiber is currently used to produce lightweight hoods, fenders, trunks, spoilers and various other parts for the aftermarket segment. A few small-run production cars use carbon fiber extensively in their construction, with an accompanying exorbitant price tag.

This is all about to change. With the newer fuel economy mandates, manufacturers will need to make their cars lighter. While aluminum is an option, carbon fiber will likely become the preferred alternative. That means the carbon fiber industry should get a huge boost over the next 5-10 years.

The second growth opportunity is related to alternative energy. Wind turbines are becoming more and more common. In 2007, production of wind-turbine blades increased 38% over the previous year. And as the turbine operators look to squeeze more juice out of every gust, they are turning to larger and lighter blades. This is a job for carbon fiber, not steel.

So how do you take advantage of these two growth sectors for carbon fiber? You find a company that has proprietary technology that allows it to produce some of the lowest-cost carbon fiber on the market.

That company is Zoltek (NASDAQ:ZOLT). While the stock has taken its lumps with the rest of the market over the last year or so, the company has spent the time going after new customers attracted to its lower manufacturing costs. It is perfectly positioned to rebound once the economy turns and demand for carbon fiber skyrockets. The current stock price has rebounded nicely from the November 2008 and March 2009 lows, and should resume its climb back up to the $40/share range from its current $12/share. That would be a very nice gain in your portfolio. Of course, you should perform your own research. But I think adding ZOLT is a fantastic play on the growing demand for carbon fiber.

Source: Take Advantage of the Growing Demand for Composite Materials