This Company Won't Fail You

When I recently recapped Navistar International's (NYS: NAV) messy first quarter, I also mentioned how the truck maker could make for an intriguing play in the long run.

Navistar has stepped into an industry that's grabbing a lot of attention. This initiative, combined with big tie-ups and a recovering truck market, should work in its favor.

Stepping on the gas
Navistar is going all out to capture the natural gas conversion trend, and why not? President Barack Obama has proposed extended tax credits and grants for alternative energy vehicles. This, along with low natural gas prices, has provided a boost to the natural gas fueling industry. Signs of an upturn are already visible, with Clean Energy Fuels (NAS: CLNE) signing yet another fuel station-building contract a few days back.

Last month Navistar joined hands with Clean Energy to boost the sale of its natural gas powered trucks. Since these trucks cost $25,000 to $40,000 more than the diesel versions, the customer can make up the difference in five years via discounts on fuel bought from Clean Energy. Navistar has opted for natural gas engines made by Cummins (NYS: CMI) in collaboration with Westport Innovations (NAS: WPRT) for its trucks. Cummins Westport engines are emerging as industry favorites, with even truck manufacturer PACCARshowing greater interest in them.

Size does matter
Navistar is introducing new trucks and engines and focusing more on the 13-liter engines than the larger 15-liter ones. The company will launch the newer version of its successful MaxxForce 13 engines this summer and has already sent it for certification to the U.S. Environmental Protection Agency. With truck giant Volvo naming 13-liter engines as the first choice of Class 8 trucks in the U.S., Navistar seems to have hit the right note.

Bonding well
Navistar boasts of long-standing tie-ups with big names such as Caterpillar (NYS: CAT) , which is about to get stronger through structural changes and a new business model. The two are even looking at a venture for developing new lines of on-highway and heavy-duty vocational trucks to be sold globally.

Navistar's focus on emerging markets is another impressive thing. Its joint venture with one of the leading Indian companies, Mahindra & Mahindra, is set to get bigger with all-India expansion plans. Recently, Navistar entered China's engine market and partnered with a Brazil bus-body maker.

The Foolish bottom line
According to the American Trucking Association, truck tonnage in 2011 grew the most it has in 13 years. Navistar, with its initiatives and growth moves, looks poised to make the most of the recovery. And when billionaire investor Carl Icahn holds a sizable stake in a company, the reasons to keep a tab on it get juicier.

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At the time thisarticle was published Neha Chamaria does not own shares of any of the companies mentioned in this article.Motley Fool newsletter services have recommended buying shares of Westport Innovations, Clean Energy Fuels, and Cummins. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

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