At the beginning of 2012, I set out to form The World's Greatest Growth Portfolio. Though I can't promise it will always live up to its moniker, the portfolio has returned 22% in just 10 months, besting the S&P 500 by about 9 percentage points.

A few weeks ago, I outlined exactly how I would go about building my portfolio for next year: Invest first and foremost in companies that demonstrate exceptional levels of innovation, with special emphasis given to those that I believe will be around decades from now.

Today, I'm going to take a deep dive into one of my current holdings -- Westport Innovations (NASDAQ:WPRT). Read all the way to the end, and I'll offer up access to a special free report on the only energy stock you'll ever really need for solid exposure to the industry.

First, a quick primer
Westport is a Canadian company that designs engines for cars, trucks, and heavy machinery that can run solely on natural gas, or on a combination of natural gas and petroleum-based fuels. Recently, natural gas has become a bigger and bigger deal in North America, with new fracking techniques making previously inaccessible gas come into play.

With the sudden rush of natural gas availability, companies have been coming up with innovative ways to use the fuel -- which burns cleaner than petroleum-based fuel. One important thing to realize about Westport is that it doesn't actually manufacture its engines; instead, it partners with original equipment manufacturers, or OEMs. Westport provides the designs, and the OEM provides the physical plant to construct the engines.

To date, the most successful joint venture the company has formed is with Cummins (NYSE:CMI), which makes engines for long-haul trucks.

The most recent update
Westport has had plenty of news to share with investors lately. Back in late October, the company announced that because of "recent feedback from Original Equipment Manufacturers (OEM) and fleet customers in North America and automotive OEM customers in Europe," it will lower its full-year guidance for 2012. Apparently, "heightened uncertainty in the economy and delayed availability of liquefied natural gas (LNG) infrastructure" led many companies to delay orders to Westport.

As I explained in a previous article,  this is what it means: If you're a trucker and own a Westport natural gas engine, you want to know there will be places where you can fill up your tank. If that infrastructure isn't in place, that makes it hard to justify paying up for a natural gas engine that might cause you more grief than anything else.

And just last month, the company came out with its earnings report. The report itself was a bit disappointing for investors. Though overall revenue was down 6% when compared to the same quarter of 2011, the picture is a bit different if we back up and take all of 2012 into account. Over that time frame, revenue is up 65%, a much more comforting figure. 

What's a Fool to do?
When I formed my growth portfolio last year, I made three different levels: Core holdings (which got an 11% allocation of capital), Tier One holdings (7.5% allocation), and Tier Two holdings (5% allocation). Westport itself was a Tier One holding. These holdings were described as "companies that are highly innovative and will likely be around 10 years from now, though not necessarily ensured to dominate their field."

I think I goofed here. Westport is simply too young a company, with too many competitive threats, to be so sure that it'll be around in 10 years. Instead, I can see myself making this a Tier Two holding: a highly innovative company that may or may not be around in 10 years.

I love how the company is putting its money behind research and development, and it has partnerships with car makers, mining equipment makers, and even railroad companies like Canadian National (NYSE:CNI).

I like to think that smart allocation in periphery companies that can benefit from natural gas is a smart way to play this boom. Instead of investing in extractors like Chesapeake Energy (OTC:CHKA.Q)which has a host of problems to deal with -- companies like Westport and Heckmann (NYSE:NESC) offer more interesting ways to gain exposure to the industry.

But to be honest, even these two companies comprise less than 4% of my total portfolio.

There are many different ways to play the energy sector, and our analysts have uncovered an under-the-radar company that's dominating its industry.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.