A 21st Century Transportation Stock
Every few decades or so, industries begin to swap one technology for another. While it doesn't happen overnight, by the time the shift is over, obscure companies have become industry kingpins.
But clearly, the big opportunity is in the large truck market, since the potential savings are so great. In February at a large trade show, every truck manufacturer in North America was offering a natural gas option—and 100% of those available trucks included some Westport content.
The company has operations worldwide, including Vancouver, California, Detroit, France, Sweden, Italy, China, and Australia. Early this year, Westport announced a partnership with a large Chinese engine manufacturer to supply engines for major transportation companies in that rapidly growing market.
China also possesses large natural gas reserves and so the government there is enthusiastic about supporting the transition to natural gas powered vehicles. The company Westport partnered with, Weichai Power, holds 40% of the heavy-duty truck engine market in China, and sold over 200,000 engines last year, so the upside should be very strong.
It’s possible that with all of Westport’s intellectual property and numerous patents, it could become a takeover target at some point. This is not necessarily a reason to buy the stock, but it’s nice to have out there as a possibility.
On August 2, the company reported strong second-quarter results, with revenue up 136% year-over-year. Gross margin percentages were also higher at 38.2%, compared to 33.9% in the prior year period.
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