Westport (NAS: WPRT) and Clean Energy Fuels (NAS: CLNE) are two of the longest shots in the natural gas space right now. As two highly speculative picks, both got nailed in the past month as broad markets tumbled and the Volatility Index (INDEX: ^VIX) spiked higher. Fortunately, the VIX fell back more than 12% today as the markets rallied. Pullbacks like this are promising signs for long-term investors and usually coincide with periods of outperformance.
But investors in these two companies got a much-needed bit of relief today, as both Westport and Clean Energy Fuels soared higher. Westport cruised 12% higher, while Clean Energy Fuels spiked 9% for the day. The biggest piece of favorable news is Volvo's recent announcement that it will introduce trucks with Westport's 13-liter natural gas engines. Volvo could be one of Westport's biggest supporters right now. The company uses the ISX12 engine produced from the joint venture between Westport and Cummins (NYS: CMI) in its VNL demonstrator trucks and plans to have them commercially available in early 2013. At this point, what's good for Westport is generally also good for Cummins, and shares were correspondingly higher today as well.
It's not just Volvo, either. Westport has key relationships in place with rebounding automaker Ford (NYS: F) regarding its heavy duty F-series trucks. Despite the speculative nature of Westport, relationships like these are a promising sign of the company's future potential. As Ford continues to stand out as the stronger of the two domestic automakers, it appears Westport put its chips in the right place.
As for Clean Energy Fuels, I didn't see any particular news that should have sent shares higher today and expect that the investor enthusiasm surrounding the stock has more to do with Westport's rise, as both companies are often mentioned in the same breath. Taking a step back, I like what the company is doing by biting off smaller market segments like trucking before tackling the broader transportation sector. Its relationship with Navistar is perhaps the best example. Like Westport, relationships like this are vital to long-term viability. Fortunately for investors, Clean Energy recognizes this and is executing accordingly.
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At the time thisarticle was published Austin Smith owns none of the stocks mentioned here. The Motley Fool owns shares of Westport Innovations and Ford.Motley Fool newsletter serviceshave recommended buying shares of Westport Innovations, Ford, Clean Energy Fuels, and Cummins and creating a synthetic long position in Ford. The Motley Fool has adisclosure policy. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.
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