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A 21st Century Transportation Stock

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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.

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The company is still generating losses, since it continues to invest in research and development. But it is getting closer to breakeven: the second-quarter loss was $6.1 million ($.11 per share) compared to $18.1 million ($.38 per share) last year.

Risks
The stock performance had been very good up until the end of March, when Cummins made an announcement that it planned to develop an engine outside the Westport partnership. Westport shares got hammered, dropping from a high of $48.71 on March 20 to as low as $22.67 on May 17.

The company subsequently commented that it didn't participate because it would have required an additional $40 million investment and said it has no problem with the Cummins decision to develop an engine on their own. The recent Caterpillar announcement pushed the stock back up again, but it is still well below its March high. This looks like a good point to enter.

Cash Flow
None. The stock does not pay any dividends at this stage. This is strictly a growth play.

Summing Up
This is a stock for growth-oriented investors who want to be in on new cutting-edge developments in the transportation sector. Risk is on the high side, but so is the reward potential.


Editor's Note: This article was written by Glenn Rogers in The Canada Report.

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No positions in stocks mentioned.
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