Shares of Power Solutions International (NASDAQ:PSIX) have exploded upward by 330% this year, while shares of its peer, Westport Innovations (NASDAQ:WPRT), have taken a major haircut during the same period. What has caused such a massive division in the way investors are looking at these two alternative fuel engine companies?
Motley Fool industrials analyst Blake Bos thinks the difference lies in Power Solutions' focus on the niche market of alternative fuel engines for power generation systems at natural gas wells, an area where the company has seen strong sales recently. PSI has also seen an average revenue growth rate of 10% per year over the past five years, which has spiked even higher in the past three years. Westport Innovations, on the other hand, is heavily reliant on the thesis that heavy-duty engines, such as those found in semi trucks, will begin to adopt the technology to utilize liquefied and combustible natural gas in a big way in the future.
Blake ultimately thinks that Wall Street has set its expectations very high for both of these stocks, with investors showing an enormous amount of enthusiasm over what many hope will be a natural gas engine revolution, and that those high expectations will translate into a hefty premium on both of these stocks. Does he see now as the time to take a position in Power Solutions or Westport Innovations? Find out in the video below.
Blake Bos has no position in any stocks mentioned. The Motley Fool recommends Westport Innovations. The Motley Fool owns shares of Westport Innovations. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.