- Westport Fuel Systems stock has become cheap over the past year, but recently started to perk up.
- Energy prices will likely have an effect on Westport Fuel Systems’ revenue, but a recent partnership should provide a tailwind for the company.
- Investors should scoop up shares of Westport Fuel Systems while they’re still inexpensive.
Based in Vancouver, British Columbia, Canada, Westport Fuel Systems (NASDAQ:WPRT) delivers clean-fuel systems designed for passenger cars and light-, medium- and heavy-duty trucks. As energy prices have fluctuated sharply in recent weeks, WPRT stock has received more investor attention than usual.
Westport Fuel Systems offers fuel-efficient products like High Pressure Direct Injection 2.0 or HPDI 2.0, a system that “enables heavy-duty trucks to operate on natural gas with reduced fuel costs, reduced CO2 emissions, and diesel-like performance.”
An argument could be made that natural gas is a clean energy source compared to petroleum. Going forward, WPRT may be influenced by the ups and downs of the natural gas price.
Yet, energy-price fluctuations won’t be the only factor to consider. Improving financials — and most of all, a deal that should provide a significant revenue source — should fuel a rally in the Westport Fuel Systems share price.
|WPRT||Westport Fuel Systems||$1.72|
What’s Happening with WPRT Stock?
At one point in February of 2021, WPRT stock traded at the $12 level. Wall Street seemed to lose interest in the stock over the next year, however, as it sank to $1.33 in early March of 2022. After bottoming out, the Westport Fuel Systems share price has moved up somewhat. Now, prospective investors have access to a real bargain.
Westport Fuel Systems’ trailing 12-month price-to-earnings ratio is quite reasonable at 21.4. Besides, WPRT stock is still much closer to its 52-week low than its 52-week high.
Furthermore, Westport Fuel Systems has improving financials. In 2021, the company generated $312.4 million in revenue, up 24% compared to 2020’s revenue.
Not only that, but Westport Fuel Systems also swung to profitability last year. Specifically, the company reported $13.7 million in 2021 net income, versus a net loss of $7.4 million in 2020.
“Westport delivered record annual revenue in 2021 despite customer demand constrained by the effects of lingering COVID restrictions, supply chain shortages and other disruptions that our global industry faces,” Chief Executive Officer David M. Johnson pointed out.
An Amazon-Size Deal
Oddly enough, the development we’re about to address isn’t listed on Westport Fuel Systems’ news page (as of March 20, 2022). Yet, it is quite possibly a game changer for WPRT stockholders.
I won’t keep you in suspense any longer. Reportedly, Westport Fuel Systems is going to supply Amazon (NASDAQ:AMZN) with natural gas engines. Apparently, Amazon ordered over 1,000 engines from a joint venture between Westport Fuel Systems and natural gas engine parts manufacturer Cummins (NYSE:CMI).
In light of this, Eric Stine, an analyst with Craig-Hallum Capital Group, reiterated his “buy” rating on WPRT stock. Stine asserted that Westport Fuel Systems is in a “prime position to capitalize” on this tailwind. No doubt, he is 100% right about that.
Yet, there are also industry-wide implications here. As Stine put it, the deal with Amazon was “arguably one of the most significant events for natural gas for transportation in many years.”
What You Can Do Now
The deal with Amazon is, of course, terrific news for Westport Fuel Systems and the company’s stakeholders.
It is true that natural gas prices will rise and fall. Nevertheless, Westport Fuel Systems should still provide excellent shareholder value as the company’s financials are improving.
Therefore, don’t hesitate to start a position in WPRT stock while it is still inexpensive. After all, it might not trade near its 52-week low for much longer.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.