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  • Does Westport Innovations Offer A Good Buying Opportunity ?

    Westport Innovations (NASDAQ: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 (NYSE: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 (NYSE: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 (NYSE: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.

    Feb 21 11:47 AM | Link | Comment!
  • Why Sprint Represents A Good Buying Opportunity

    A Bullish case for Sprint

    Sprint (NYSE:S) posted a $1 billion loss for the fourth quarter, or $0.26 per share, but this was well ahead of the $0.33 analysts had expected; revenue of $9.14 billion was also above the $8.97 billion consensus estimate. Sprint also managed to add 58,000 contract subscribers in the fourth quarter.

    Speculation swirls around a possible deal to merge with T-Mobile US (NYSE:TMUS) which would enhance its competitive advantage against AT&T (NYSE:T) and Verizon (NYSE:VZ) More details here.

    If you look at Sprints earnings report closely, it reported $9.1 billion in fourth-quarter revenue, a 1.5% year over year increase and ahead of Wall Street's $9.0 billion sales estimate. Sprint saw a $0.26 GAAP net loss per share, up from a $0.44 loss per share a year ago. Analysts were expecting a larger $0.34 loss per share.

    Sprint added 682,000 subscribers in the quarter, including 58,000 post-paid customers on contract and 322,000 prepaid lines. Ninety-five percent of all post-paid phones sold in the fourth quarter were smartphones. The company reached a record high of 53.9 million total subscribers at the end of the quarter.

    Looking ahead, Sprint expects adjusted EBITDA of roughly $6.6 billion in 2014, up from $2.4 billion in fiscal year 2013.

    Sprint is also heavily investing in its infrastructure which will support the new Sprint Spark network which is a triple-band LTE platform promising network speeds of up to 150 megabits per second. This is available in 14 major markets today; Sprint also hopes to cover more than 100 urban areas over the next 2-3 years.

    "We are building a foundation for future success," said Sprint CEO Dan Hesse.

    Against this upbeat price action, call volume has more than tripled average intraday levels, and a handful of option traders are betting on a quick move higher in the near term.
    After this report Deutsche Bank upgraded Spring to a buy rating.

    Along with the upgrade, analyst Brett Feldman reiterated his price target of $9.25, representing about 10.12% worth of upside to Friday's close. While momentum traders might be turned off by the stock's steady year-to-date decline, Feldman believes Sprint is too cheap to pass up given its still-significant competitive edge and solid growth prospects specially if the deal with T-Mobile goes through.
    According to Deutsche, Sprint's risk/reward trade-off is rather attractive at this point. "Our upgrade to Buy reflects the recent pullback in the stock and is based on the same 2 key themes we outlined last July: (1) a significant spectrum advantage and (2) an outlook for material EBITDA growth during the next 2 years," noted Feldman. "

    Barclay's also has a $9.00 price target on the stock. Barclay's price target suggests a potential upside of 7.15% from the stock's previous close.

    As wall street and the banks digest and decipher the recent earnings reports, Price targets are slowly inching up by the day, and I do feel the current price targets of $9-9.50 set by the banks are very conservative and they will be raising the price targets soon which represents another catalyst for the stock.

    Based on the fundamentals as well as technical pattern in Sprint, I believe the upside is to about $11.50 and $15+ if the deal with T-Mobile goes through.

    Disclosure: I am long SBUX.

    Feb 19 11:06 PM | Link | 3 Comments
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