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Readers of this space know that the investment tack preferred here tilts toward demonstrated business models. But every once in a while, an exception is made, Westport Innovations (WPRT) is one, and is worth a review.Note: I consider Westport to be a high-risk stock not suitable for low-risk/moderate-risk investors.
Westport is hoping is it on the cutting edge of a structural change in transportation fuel use. Already common as a fuel for home heat, electric power generation, and for commercial use, natural gas' next hurdle -- perhaps its biggest hurdle -- concerns its use as a vehicle fuel. True, we're seeing more and more natural gas buses on America's roads, but that's just a smidgen of vehicle fuel consumption.
Canada-based Westport Innovations believes the nation can cost-effectively transition to natural gas-fueled trucks, including those big 18-wheelers that dominate goods transportation in the U.S. Westport converts diesel trucks to run on alternative fuels, including natural gas.
Westport started by converting vehicles that refuel at a central depot, such as buses and garbage trucks, but now is expanding to highway trucks. Key hurdles remaining include the build-out of the natural gas refueling network to enable coast-to-coast refueling. The First Call FY2010/FY2011 EPS estimates for WPRT are a loss of 95 cents to a loss of 43 cents.
Technically, Westport's chart is strong -- an uptrend, but one that also features volatility. Hence, the stock is not for the squeamish: don't consider WPRT if you can't tolerate a 15-20% price drop in a month -- it could happen.
2010 Outlook: I view Westport as a long-term play, but if investors are looking to sell WPRT within the year, it's probably best to take your profits after it rises to $23-24, if it fails to rise above $25.
Stock Analysis: I consider Westport Innovations to be a high-risk stock. If you can tolerate high risk and want to invest in this stock, consider buying a 25% position in WPRT now; then buy another 25% in one month, if U.S. economic conditions don't worsen substantially. Under any circumstance, I wouldn't buy more than 75% of my WPRT position before April 2010 and I'd put a sell/stop loss at: $7.
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Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
Westport started by converting vehicles that refuel at a central depot, such as buses and garbage trucks, but now is expanding to highway trucks. Key hurdles remaining include the build-out of the natural gas refueling network to enable coast-to-coast refueling. The First Call FY2010/FY2011 EPS estimates for WPRT are a loss of 95 cents to a loss of 43 cents.
Technically, Westport's chart is strong -- an uptrend, but one that also features volatility. Hence, the stock is not for the squeamish: don't consider WPRT if you can't tolerate a 15-20% price drop in a month -- it could happen.
2010 Outlook: I view Westport as a long-term play, but if investors are looking to sell WPRT within the year, it's probably best to take your profits after it rises to $23-24, if it fails to rise above $25.
Stock Analysis: I consider Westport Innovations to be a high-risk stock. If you can tolerate high risk and want to invest in this stock, consider buying a 25% position in WPRT now; then buy another 25% in one month, if U.S. economic conditions don't worsen substantially. Under any circumstance, I wouldn't buy more than 75% of my WPRT position before April 2010 and I'd put a sell/stop loss at: $7.
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Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
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Reader Comments (Page 1 of 1)
3-20-2010 @ 10:06AM
MyKisa said...
...76 trillion cu ft natural gas in gulf of mex.....but China will take it all...
4-08-2010 @ 7:03AM
john reed said...
Wstport has a virtual Monopoly for on-road Natural gas powered engines for use inthe USA, as they have the ONLY 2010 CARB certified motor IN THE WORLD that is available for OEMs to put intheir rigs. The only competition is Emissions Solutions, a very small company in Texas, that actually license its technology from Omnitek Enginerring (OMTK:PK), as the only other company with CARB 2010 approval. problem is Emissions Solutions can't supply engines in sufficient quantity and don't have the pockets to back its warrantyrequirements for OEMs.
Omnitek is staying in the stationary engine market, where it has no real competiton. WPRT has risen from $10 to $18 since this article.
If HR 1835 passes, it will be a colossal windfall for both WPRT and OMTK