Today's 2 Hottest Stocks

Investors are like anyone else: We love an exciting headline. Whether it's a train-wreck disaster or a tale of fortunes being made overnight, we crave the big stories. While watching the market zig and zag each day can be fun, the real excitement comes in the trenches with individual companies. So here's a look at two of today's most guilty-pleasure-gossip-magazine-cover-worthy stocks putting up the biggest moves.

Westport Innovations (NAS: WPRT) has been an anchor on many portfolios over the past three months, as shares slid almost 40%. There were worries when it was announced that Cummins would be producing its own natural gas engine. It was a JV partner, and investors were confused by the new "frenemy" relationship that seemed to be forming. As a volatile and speculative stock, the company took an outsized beating as the broad markets slid as well, but this is to be expected with a volatile company.

But it appears the road to the natural gas revolution is slowly being paved by big industrial contracts. News that Caterpillar (NYS: CAT) is in an agreement to develop natural gas engines with Westport sent the natural gas company's shares 21.6% higher for the day. The specifics of the deal remain unknown, but the big takeaway is that natural gas is gaining traction, albeit slowly, as a viable fuel for transportation.

As an indication of how slowly these things tend to move, commercial production between the two companies won't happen for about five years. On the flipside, though, the enormous amount of time and money necessary for these sorts of switches means that once the engines are in place, they're likely to remain entrenched and create a virtuous cycle of increasing natural gas usage. That's why adoption by companies like Caterpillar, Volvo, and Waste Management (NYS: WM) are huge long-term wins for the company. Just look at Waste Management's domino-like usage of natural gas engines. What started off with a few trucks is now slated to affect more than half of its fleet.

For all of the love being heaped on Westport today, Limelight Networks (NAS: LLNW) got an equally unexpected bath of ice water, falling 12.6% on the news that Netflix (NAS: NFLX) will develop its own commercial delivery network. Unfortunately for Limelight, it collects 11% of its revenue from Netflix, making the streaming company its largest customer. Netflix's creation of a CDN was inevitable, though, and it follows in the path of other video-heavy providers such as Google and, both of which have developed their own CDNs.

While this is may be bad news for the CDNs in general, as Netflix accounts for 20% to 30% of all U.S. Internet traffic, it may not be as bad as everyone thinks. Generally speaking, Netflix's traffic is low-margin revenue for these companies. The void that Netflix will create on the top line for companies like Limelight will be hard to fill, but now they can focus on higher-margin revenue instead and worry less about duking it out over price. Companies in this space survived the development of Google, Microsoft, and Amazon's CDN, and they'll survive this too. Losing Netflix is like breaking up with an attractive, high-maintenance girlfriend. Sure, it's an Internet traffic darling, but it's a big drain on your wallet.

We fools know how to pick 'em
If there is one thing that Westport and Netflix have in common, aside from making waves today, it's that they both have been high-conviction recommendations by The Motley Fool in the past. We recommended Netflix way back in 2004, and it's gone on to 400% returns since. Westport came on our radar and became a recommendation at the beginning of 2011, and it has beaten the S&P by 66% since. Both were picked by our incredibly talented Motley Fool Stock Advisor team, and you can read about three of the stocks they believe will help you retire rich today. Their top picks are free now, but they won't be forever, so read more about them while you still can.

At the time thisarticle was published Austin Smith owns no shares of the companies mentioned here. The Motley Fool owns shares of Waste Management, Netflix, and Westport Innovations.Motley Fool newsletter serviceshave recommended buying shares of Waste Management, Netflix, and Westport Innovations and creating a write covered strangle position in Waste Management. 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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