Please ensure Javascript is enabled for purposes of website accessibility

Why Westport Fuel Systems Inc's Shares Popped 16% Today

By Travis Hoium – Updated Jan 2, 2018 at 1:42PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

A new loan and an agreement to expand sales in China have this natural gas stock surging.

What happened 

Shares of natural gas engine technology company Westport Fuel Systems Inc (WPRT 4.41%) jumped as much as 15.7% in trading Friday after the company announced a new loan and business agreement. At 11:10 a.m. EST, shares were still up 14% for the day. 

So what

The biggest announcement was a $20 million secured term loan agreement with Export Development Canada. The loan will carry an interest rate of 9% plus fees, which is extremely high in today's low-interest-rate environment, but the rate could fall to 6% if the company meets certain undisclosed milestones. 

Natural gas car being filled with fuel.

Image source: Getty Images.

In a separate announcement, Westport said it has agreed to a memorandum of understanding with Weichai Power that "sets the framework for finalizing the development, marketing, and commercialization" of Westport's direct injection technology in China. A definitive agreement is expected early in 2018. 

Now what

Westport Fuel Systems has been mired with losses for years, and investors are hoping they're seeing the company begin to turn the corner to profitability. In the past year, revenue has been up and losses are declining, so expanding in China could continue the momentum. I'd like to see the company reach sustainable profitability and prove out a natural gas market that can compete with emerging electric vehicles before jumping into the stock, but today's news was an incremental positive nonetheless. 

Travis Hoium has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Westport Fuel Systems Inc. Stock Quote
Westport Fuel Systems Inc.
WPRT
$0.91 (4.41%) $0.04

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
326%
 
S&P 500 Returns
102%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/04/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.