What happened

Shares in clean-energy company Westport Fuel Systems (WPRT -0.43%) surged higher by 25.3% in February according to data from S&P Global Market Intelligence. However, merely mentioning the monthly performance would not tell anything like the whole story. The reality is that the stock was up over 60% on the month before correcting after Feb 8.

It comes down to an article from Reuters on Feb. 5 that outlines how Amazon (AMZN -0.68%) ordered "hundreds of trucks that run on compressed natural gas." The engines will be supplied by a 50-50 joint venture between Westport and Cummins (CMI 1.44%) named Cummins Westport. The move comes as a consequence of Amazon's drive to invest in less-polluting vehicles for its fleet.

A man pointing to a rising trend line on a cement wall.

Where is Westport stock headed next? Image source: Getty Images.

Cummins Westport engines run on natural gas, renewable natural gas, or biomethane stored on the vehicle in the form of compressed natural gas or liquefied natural gas. Cummins is a major transportation engine manufacturer, while Westport develops technologies that allow vehicles to run on clean energy fuels.

So what

According to Cummins Westport, the joint venture has 80,000 engines in service worldwide so the order of a few hundred from Amazon is unlikely to move the needle much. On the other hand, it could be a stepping stone for greater things and it's also an endorsement from a major company that's likely to be significantly ramping its transportation spending in the coming years.

It's also the kind of narrative that Westport needs to justify a $1.37 billion market cap for a loss-making company expected to generate just $238 million in sales in its fiscal 2020.

What next

Westport will release its fourth-quarter earnings on March 15. Investors should look out for any commentary relating to the Amazon orders or any other potential adoption of Westport's technology. It's very hard to know if Westport will be a big winner from the energy transition, but positive news flow is only going to strengthen its case.