But what if I tell you these losses don't bother me, and that the stock shedding nearly 9% since the results came out actually represents a great opportunity for long-term investors? Take a look at why I'm still positive about Westport.
Westport's books might be replete with red ink, but look at its top-line growth. The company has started the year on a good note, with first-quarter revenue surging 133%. I am emphasizing top-line growth rather than the bottom line because that seems more sensible for companies such as Westport that are still undergoing a growth phase. Westport's gross margins have consistently stayed well above the 30% mark during the past few quarters (it stood at 32% in the first quarter).
As far as business is concerned, Westport boasts of some strong joint ventures and partnerships. The one with Cummins
The next big thing for this venture is slated to be the new fuel-efficient ISX12 G engine that Cummins will start producing on a full scale next year. With these engines, the company hopes to make it big in new market segments such as regional hauling and refuse trucks. Strong preliminary interest by truck makers suggests that these engines could be a hit. For example, PACCAR
Speaking of partnerships, there are way too many to be mentioned in this article. From auto giants to equipment powerhouses to oil majors, Westport is involved with them all. A recent partnership with Ford
The Foolish bottom line
Natural gas conversion is gathering steam -- there's no doubt about that. The latest encouraging announcement has come from the British Columbian government, which has announced a program to provide $62 million worth of incentives to utility companies taking steps to promote the use of natural gas vehicles in the region. Westport has already approved this program, and I won't be surprised if it soon comes up with ways and means to avail this lucrative opportunity.
Westport's technology and patents should take it far, and I feel those with a long-term investment horizon needn't worry about the recent drop in its stock prices. To track Westport, click here to add it to your stock watchlist.
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