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  • Does Westport Innovations Offer A Good Buying Opportunity ?  0 comments
    Feb 21, 2014 11:47 AM | about stocks: WPRT, TTM, CMI

    Westport Innovations (WPRT) has gained a reputation as one of the world's leading manufacturers of natural gas and alternative fuels engines. In fact, natural gas is an inexpensive, cleaner alternative to diesel and gasoline. The Westport brand boasts low-emission engine and oil system technologies for any application and market: medium, light, heavy-duty, or even high horsepower fuels.

    It is this ingenuity which has sparked a relationship between Westport and Tata Motors Limited (TTM)-themselves a mega automobile manufacturer in India, and branded as the world's fifth largest truck and bus manufacturer. The announcement of the synergy on February 12th, shifted both companies into a new and revolutionary gear in vehicular manufacturing.

    The duo moved into motion, and from their merger, a new spark-ignited (SI) natural gas 3.8L turbocharged engine featuring the Westport WP580 Engine Management System (EMS) was birthed, bringing hope to medium-duty applications such as the Tata's 5.7L. Promising a swift and revolutionary approach to the natural gas vehicle market, Thomoson Rippon, Executive Vice President of Westport in a press release, spoke to the tremendous fruit the partnership with Tata's leadership and Westport's unique technology would bear.

    Not only would pricing now be competitive, but both brands could now position OEMs in not only India, the largest bus and truck market in the world -where Tata has a firm footing, but in markets such as China. With a view for heavy-duty trucks and bus sales to amount to 289,000 units for 2014, and a projected climb to 478,000 a year by 2022, Westport is indeed a golden opportunity. Westport's is sure to benefit from earnings in this kairos moment, as India now zooms towards natural gas.

    But Westport's lucrative business partnerships go well beyond Tata Motors, and include Cummins (CMI) in North America, and Westport Weichai in China. The 50% shares partnership with Cummins, allows Westport's natural gas engines, for at least another 10 years, to build and market to heavy-truck engines, as well as a diesel engine variant. Not to be outdone, the Westport Weichai partnership, which has been going strong since 2008, has enjoyed natural gas engines sales, and the increase in natural gas fuelling stations has made the 35% equity stakes something to be fired up about.

    Westport's diverse offerings and various partnerships speaks to their ability to meet the demands of an ever growing and changing industry, as well as the savvy business investor. Should current earnings and technical patterns continue to trend upward, price targets should be around the $25 area for short term traders and about $39.30, as an overall 2014 target, which offers a potential gain of 131% from Wednesday's closing price.

    Disclosure: I am long WPRT.

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