About a month ago,
I told you about
a company that could potentially spell the death of the gasoline
engine as we know it. That's good news for drivers -- who have been
feeling it at the pump lately -- but it's even better news for
investors who can remain patient with this stock.
In fact, when I first profiled this stock in my
newsletter, it was around $24.11. Ten days later --
rose as high as $29.63, for a short-term gain of 23%, before
Like any game-changing, innovative company still in the early
stages of growth, shares of this stock are going to be volatile. It
happens. But I'm convinced that this company's long-term growth
potential outweighs the risks. After all, we're talking about the
death of the gasoline engine...
The company I'm talking about is
Westport Innovations (Nasdaq:
, which makes natural-gas engines for semi-trucks and other
The Canadian manufacturer's engines were the star of recent
trucking trade shows as the captains of industry and independent
truck operators alike saw a way to dramatically decrease fuel
costs, as well as to comply with ever-stricter (and costly)
Some of the largest U.S. fuel retailers have pledged to add natural
gas to their truck stops, and Energy Secretary Steven Chu has said
the nation will soon have a natural gas filling station every 150
miles -- easily enough to support national over-the-road routes.
The engines have even drawn the support of President Obama, who
likes that natural gas is cleaner than diesel, that it is
domestically produced, and that new enginesmean new "green-collar"
So with industry support, a push to upgrade fuelling
infrastructure and a cheerleader in the White House, natural gas is
a hot area, and Westport Innovations is clearly a company with
game-changing potential. As these new engines begin to establish a
toehold, then a footprint, within the trucking industry, Westport
could see shares grow as dramatically as its revenue, which was up
53% in 2011 in comparison with the year before and is on pace to
grow at least 40% this year.
But let me be clear -- with this outstanding growth potential
comes a commensurate level of risk. That's always true, of course,
but investors in this space need to realize that they are dealing
with emerging new technology as well as with
risk. Westport's shares will be influenced by the price of natural
The good news for Westport is that the price of natural gas is
likely to stay low, as increasing shale production has created a
huge supply glut. I am confident in maintaining my recommendation
on these shares.
Action to Take -->
Expect volatility with this stock. The
on these shares is nearly twice the
(meaning they are twice as volatile as the overall
). I think Westport is an extremely strong buy at any price under
$37.50, unless the price of natural gas, currently at about $2.50,
exceeds the $5 mark. Patient and watchful investors are likely to
be rewarded with a lower entry point.
Andy is known for finding stories no one else is covering... and
making bold calls
. This includes a price spike for a key commodity (responsible for
10% of U.S. electricity), Warren Buffett making a major investment
in Japan ... and one of the most widely-owned stocks in America
dropping like a rock. To get the full details on Andy's predictions
Andy for the next 12 months,
you can watch this video
, or read Andy's report
Andy Obermueller does not personally hold positions in any
securities mentioned in this article. StreetAuthority LLC does not
hold positions in any securities mentioned in this article.