My newest portfolio addition is WPRT – Westport Innovations a Natural Gas Infrastructure play. As I have stated quite a few times in the previous months I am starting to get very bullish on 2 themes:
- Natural Gas Infrastructure related stocks
- Agricultural Commodities (Check my Technical Analysis Video on DAG – Double Long Agriculture ETN)
Both investment themes have the potential to develop into new long-lasting mega trends. What I like about them is the fact they are at an early stage in their respective bull market cycles. I am still bullish on Gold and Silver but from a purely technical perspective we are at a later stage in those bull markets. Granted, the biggest moves tend to occur at the end of a bull market. The disadvantages are the following: Volatility is much greater and you have to compete with aggressive momentum traders. Great momentum traders are typically very disciplined traders. So you are exposing yourself to a situation where you are competing with the best traders around. Simply put: Controlling emotions and risk requires much more discipline. Therefore I tend to avoid those environments as much as I can. Less competition and rather low volatility environments are what I am looking for. Personally I think it is a less difficult environment as it better suits my personality.
WPRT – Westport Innovations now has the potential to develop into a new leader. The recent news might be a game changing event for the stock. The stock’s price action and its technical behaviour support that assumption. Here is the gist of the WPRT news release:
Westport to Launch Innovative Co-Marketing Program with Shell to Develop North American Market for Liquefied Natural Gas Vehicles & Fuels
VANCOUVER, BC – Westport Innovations Inc. (TSX:WPT / NASDAQ:WPRT), a global leader in alternative fuel, low-emissions transportation technologies, today announced that it has entered into an agreement with Shell to launch a co-marketing program in North America aimed at providing customers a better economic case when purchasing and operating liquefied natural gas–powered vehicles (LNGVs) by consolidating key value chain components such as fuel supply, customer support and comprehensive maintenance into a single, user-friendly package. Under the terms of the agreement, both companies will leverage their industry-leading positions in liquefied natural gas (LNG) production and distribution for Shell and LNGV systems and technology for Westport, to deliver a superior integrated commercial solution to participating customers, initially in North America. Additionally, the companies will collaborate to develop industry standards for LNG as a new transportation fuel in support of their on-going efforts to maintain the highest health, safety and sustainable development practices.
This is increasingly looking like a paradigm shift being under way. What I typically like to gauge is a company’s ‘Story Stock Potential’. With WPRT I see huge potential. The key words that come to mind here are: Energy independence, domestic energy, less reliance on foreign oil, infrastructure build out, job creation and innovation.
Although I’ve talked about this in the past I am going to do it again. What happened after Fukushima? From a trader’s perspective this was one of the most important exogenous events that had a serious impact on stock prices in the energy sector. Originally my thoughts were: Solar stocks will be the killer trade. This is what I thought was common sense. After less than a week though, the charts were telling me this assumption was wrong. The possible sectors money could flow into searching for viable alternatives to nuclear energy are the following: Coal, Solar, Wind, Geothermal, Oil and Natural Gas. It was actually Natural Gas related stocks that rocketed higher. That was the market’s way to tell me which sector I should focus on. Remember: My job as a trader is to listen to the market’s message. Imposing my views and my opinions on the markets is dangerous and most often a losing proposition. The market is stronger than I am. Period. That is the reason why I wrap up my quote section with the following trading quote:
I’m going to go where the markets take me.
The technical situation with WPRT is best described as follows: The stock is trading at an All Time High. This simply means there is huge buying pressure. Considering the fact we are most likely in a bear market situation this is all the more impressive. This is of course a potentially dangerous situation. A serious bear market can drag down all kinds of stocks. Even the best ones. Buying stocks making new all time highs though is the best insurance you can get. As the buying pressure is intense those leading stocks give you more time and better opportunities to exit your position if the tide turns. That being said, the stock will now attract momentum traders’ attention. WPRT is now popping up on various scans. New all time high scans and above average volume scans to name but a few. This is actually a good thing as the odds of moving further to the upside have increased. It actually doesn’t matter that most of these traders do not really care about ‘macro analysis’ or ‘big picture investment themes’. Printing new highs simply brings in various types of market participants. Then the potential to fuel more interest with even more market players simply increases.
Conclusion: The following assessment of the current situation nails it:
LNG is cheaper, cleaner, American and abundant. – CHK – Chesapeake Energy IR Presentation
I did a quick 5 minute Youtube video comparing WPRT with various natural gas stocks. In the video I explain why from a purely technical perspective WPRT – Westport Innovations is my favourite stock pick. Make sure to select the 720p resolution and to watch the video in full screen mode. Enjoy!
http://www.youtube.com/watch?v=pJBmQSkbolU
- Up-to-date WPRT – Westport Innovations chart on my public list.
- Natural Gas I. – Sector Overview Chart
- Natural Gas II. – Sector Overview Chart
From Westport Innovations’ website: Westport Innovations Inc. is a global leader in alternative fuel, low-emissions technologies that allow engines to operate on clean-burning fuels such as compressed natural gas (CNG), liquefied natural gas (LNG), hydrogen, and biofuels such as landfill gas. Our unique technologies reduce nitrogen oxides (NOx), particulate matter (PM), and greenhouse gas emissions (GHG). The Company focuses on three distinct categories or target markets – light-, medium-, and heavy-duty – through Westport business units or joint ventures. Westport LD is focused on light-duty automotive systems, components and engines, including 2.4L engines for industrial applications such as forklifts and oilfield service. Cummins Westport (CWI), a joint venture with Cummins, sells the world’s broadest range of low-emissions alternative fuel engines for commercial urban fleets such as buses, refuse trucks and vocational vehicles. Westport Heavy Duty (Westport HD) is engaged in the engineering, design and marketing of natural gas-enabling technology for the heavy-duty diesel engine and truck market.
Stocks are never too high for you to begin buying or too low to begin selling. – Jesse Livermore
My public list with all my charts can be viewed here:
http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID2791469
Buenas noches!
{ 1 trackback }
Comments on this entry are closed.