What's Behind Westport Innovations' Wild Year?

The first half of 2012 is in the rearview mirror, and investors are gearing up for what looks to be an action-packed ending. There are bound to be some big winners -- and more than a few duds -- no matter what happens in the United States and abroad.

Will your favorite stock have its victory lap as we hit the home stretch, or will it get lapped? First-half performances can hold some clues, so let's look to the recent past to find out whether Westport Innovations (Nasdaq: WPRT  ) deserves a place in your portfolio going forward.

First-half recap
Westport has been on a roller coaster this year, cresting at more than a 40% gain before plunging precipitously. The stock's still positive for the year, but it hasn't recaptured its former highs:

WPRT Total Return Price Chart

WPRT Total Return Price data by YCharts.

Here are a few key metrics regarding its recent performance:

Market Cap $2 billion
TTM Revenue $204 million
TTM Net Loss ($51 million)
TTM Free Cash Flow ($59 million)
MRQ Revenue $89 million
MRQ Net Loss ($23 million)
MRQ Free Cash Flow ($17 million)
MRQ Revenue/Net Income Year-Over-Year Change 122.5%/(64.3%)
Motley Fool CAPS Rating (out of 5) *****

Source: Morningstar. TTM = trailing-12-month. MRQ = most recent quarterly.

What the numbers don't tell you
Clean Energy Fuels (Nasdaq: CLNE  ) mirrored much of Westport's early share-price growth this year, as both stocks were buoyed by hopes of the NAT GAS Act passing. When that didn't materialize, the sell-off was on in earnest. But along the way, Westport offered some telling (and tantalizing) pieces of information on its present growth and future potential.

Westport and Cummins' (NYSE: CMI  ) well-known partnership received Navistar (NYSE: NAV  ) and Clean Energy's blessing in February. Navistar, after announcing its Clean Energy partnership to put more nat-gas trucks on the road, revealed that it would be using Cummins-Westport engines in its production lines. Westport's 2011 earnings report also had some interesting tidbits, including the revelation that CEO David Demers would be targeting Heckmann's (NYSE: HEK  ) fleet of fracking-services trucks for conversion.

The Cummins-Westport-Navistar honeymoon didn't last very long, though. Shortly after the NAT GAS Act went down in flames, Cummins announced its intent to build its own nat-gas engine without Westport's help. Downward pressure continued in May, when a weak first-quarter report sent shares to their 2012 lows.

Good news arrived later in May as Westport engineered a relationship with Volvo. The engine maker soon made another big move, revealing another partnership with Caterpillar in early June.

Going forward, shareholders should watch for other major partnerships and supply arrangements. Big shifts in the price of natural gas should also be of particular interest, as a big driver of Westport's appeal is the relatively lower expense of nat-gas fuel compared to gasoline and diesel. Fellow Fool Travis Hoium points out that we've got too much natural gas already, and offers a chart noting the steady decline in nat-gas drilling rigs over the last few years.

Westport also happens to be a very popular stock for the shorts, so its upcoming earnings report could see a huge movement in either direction.

Will the upcoming elections push Westport in the right direction? It's possible. The Motley Fool's been digging into the election's impact on your portfolio, and we've put together a free list: "Stocks That Could Skyrocket After the 2012 Presidential Election." Cummins is one company that could see huge benefits. To find out the rest, click here for your free copy of this important report now.

Fool contributor Alex Planes holds no financial position in any company mentioned here. Add him on Google+ or follow him on Twitter @TMFBiggles for more news and insights.

The Motley Fool owns shares of Heckmann and Westport Innovations. Motley Fool newsletter services have recommended buying shares of Cummins, Westport Innovations, and Clean Energy Fuels. The Motley Fool has a disclosure policy.

We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


Read/Post Comments (4) | Recommend This Article (5)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On July 09, 2012, at 6:18 PM, clbjblk wrote:

    WPRT WILL DO BETTER WHEN THIS NEW PRESIDENT TAKES OFFICE AND THAN ABOUT 2 YEARS TO GEAR UP, GOOD TIME TO BY BUT NEXT YEARS OPTIONS WILL BE A BIG BANG IT WILL HAPPEN THE OBAMA TIME MACHINE HOPEFULLY GOES AWAY AND WE CAN USE OUR OWN RESOURCES. THE BIG FOOLS PICK IS GOOD BUT NEXT YEARS LONG TERM CALL OPTIONS WILL BE OFF THE WALL .it is really the only thing to compete with bio fuel not for price it will kill them on price but wprt will shut the tree huggers up and save cash and be clean, it is like getting a mining permit in the US 7 YR'S WHILE CANADA AUSTRALIA OR OTHER NONE THIRD WORLD COUNTRY'S IT TAKES MAYBE 2 YRS, AND THEN YOU CAN START YOUR MINE AND THEN SEVERAL YEARS FOR PRODUCTION, GOOD STOCK TIME KILLER BUT THERE DAY WILL BE BIG.

  • Report this Comment On July 09, 2012, at 9:04 PM, bilbowler wrote:

    sober up

  • Report this Comment On July 09, 2012, at 9:51 PM, LAVol wrote:

    The article implies the Cummins/Westport alliance dissolved. Cummins is developing a nat gas engine larger than the ones the Cummins/Westport partnership is targeting. Cummins/Westport is still a huge deal for Westport. The price of natural gas and diesel will have to move appreciably closer to make take difference insignificant. A gallon of diesel is about 139,000 Btu, or @ $3.00, $0.02 cents per 1000 Btu. Nat gas @ $6.00 delivered is $0.006 per 1,000 Btu--more than 3X less expensive than diesel. It does not seem reasonable that the gap between the two will make diesel more economical in the near future.

  • Report this Comment On July 10, 2012, at 7:47 PM, BillyMalibu wrote:

    What about the two deals Westport did with General Motors? This sets the stage with Volvo for passenger car engines to go along with the truck engines being built. Long term prospects should be good though I don't like that they are not profitable yet. But with natural gas a cheap alternative to diesel...this has the potential to revolutionize the internal combustion engine and provide America with a truly inexpensive fuel source.

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