Westport Innovations (NASDAQ:WPRT)

CAPS Rating: 5 out of 5

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Player Avatar TMFInnovator (34.67) Submitted: 5/28/2013 2:32:36 PM : Outperform Start Price: $29.32 WPRT Score: -90.85

This will take a while to play out, but Westport knows what they are doing.- WPRT is using the joint ventures (CWI and WWI) as proofs-of-concept that their natural gas engines are more economically efficient and environmentally friendly than diesel engines.- Once they develop a sufficient amount of data, the biggest players will start to convert their trucking fleets over to Westport's high-pressure direct injection (HPDI) technology. After all, transport is just a cost to most companies, and natural gas has a dramatic cost advantage over diesel or gasoline. WM has already committed 80% of its fleet to natgas: http://online.wsj.com/article/SB10001424052702304707604577422192910235090.html.- Once this happens, watch for the company's "On-Road Systems" segment to take off. Currently only 26% of the company's Revenue, I think this is the bread-and-butter of Westport's future. I'll be keeping an eye on this one.The biggest risk is that the engine manufacturers learn enough from Westport to develop their own, superior technology. If that does happen, WPRT loses their IP competitive advantage and all related royalties. That would be very bad.But overall, this is a capital-light business with a huge tailwind, and they seem to be taking the right steps for long-term success.

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