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By David Urani

Looking toward the remainder of 2013, one theme that continues to be promising, particularly here in the United States, is that of the flourishing natural gas industry. Obviously, we come into the year with more of President Obama's pro-clean energy policies that have kept natural gas in the spotlight as a readily available clean fuel. But just as important, if not more important, natural gas is also cheaper than oil giving it a promising future. Having really given coal a strong run for its money already in the power industry, automotive applications continue to be in their infancy. One day, it's not out of the question for natural gas vehicles to gain popularity in the consumer automotive market, considering the low price and cleanliness.

Westport Innovations (NASDAQ:WPRT) is perhaps the most knowledgeable company there is on natural gas engine technology and has been doing a great job of bringing that technology to the commercial trucking industry. It has more patents than anybody else in relation to natagas engines, beating out Toyota (NYSE:TM), Ford (NYSE:F), and Caterpillar (NYSE:CAT) among others with a focus on the delivery and combustion of natural gas. And with these technologies, the company has been able to successfully delve into the commercial trucking industry, having created alliances with three of the top four engine makers and six of the top 10 truck makers. Just last month, in a partnership with Cummins (NYSE:CMI), WPRT was awarded one of the largest natural gas fleet orders in North America ever. L.A. Metro will order 550 natural gas buses, with an option to buy 350 more in 2016.

Expanding on that partnership with Cummins, WPRT stock popped on Friday on analyst speculation of a takeover by CMI. With that move, the stock looks close to staging a technical breakout through resistance between $31 and $32, at which point it has room up to around $36.

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The stock is not without risk, as with a lot of developing technologies the company has been running at losses. Expectations are that it will lose $1.13 per share in 2013, a modest improvement from a $1.57 loss in 2012. However, revenue growth is still expected to be 28%. It currently has a net asset value (assets minus liabilities) of approximately $401 million, which includes $258 million of cash and $82 million of debt. And given the company's strength in the field, and still relatively small market cap ($1.5 billion), we don't think it's out of the question that the company could eventually be seen as a takeover target.

Source: Stock Action: Westport Innovations