- A new energy era in the US
- A bumpy road for WPRT
- CLNE shares have been just as volatile
- Alternative energy powers these two companies
- A massive order provides a substantial clue
A sign that energy consumption is experiencing a dramatic shift, Elon Musk, Tesla’s (TSLA) CEO, is vying with Jeff Bezos for the position as the world’s wealthiest person. As of the end of last week, Bezos, the E-commerce king, was leading Musk with a net worth of $190.8 billion compared to $177.2 billion for TSLA’s CEO, the king of EVs. While Jeff Bezos has been on the list for years, Elon Musk only recently moved into a leadership position as TSLA shares have skyrocketed. Musk and Bezos have been changing places over the past weeks.
Meanwhile, TSLA’s ascent reflects the changing environment for energy demand. TSLA’s market cap is over three times the level of the world’s second-leading carmaker, Toyota.
As the landscape for energy shifts from crude oil and the world addresses climate change through limiting emissions, companies that make engines that run on alternatives or provide alternative climate-friendly refueling solutions have been soaring. TSLA and Musk’s ascent reflects the shift. In 2012, shares of Westport Fuel Systems (WPRT) reached an all-time high of $50.19.
That same year, Clean Energy Fuels (CLNE) traded to its high of $24.75 per share. WPRT fell to a low of 70 cents per share in March 2020. CLNE’s low came the same month at $1.05 per share. Since then, both companies’ shares have soared as a new era for energy is dawning in the United States.
A new energy era in the US
Telsa’s share price ascent has come as Elon Musk brilliantly changed the market’s perception of the company from a carmaker to a technology, green energy, and most recently, a fintech company. Last week, he announced the purchase of $1.5 billion in Bitcoin and said TSLA would accept the cryptocurrency for its products. The announcement launched Bitcoin to a new high at nearly $50,000 per token.
Green energy under the Biden administration is experiencing a renaissance. Two companies the market had left for dead have done an about-face with their shares exploding higher in early 2020. WPRT and CLNE were highflyers in 2012 and reached bottoms eight years later in 2020. As of the end of last week, the shares that most analysts ignored last year were back at the top of the buy lists.
A bumpy road for WPRT
WPRT engineers, manufactures and supplies alternative fuel systems and components for use in transportation applications worldwide. WPRT has a joint venture with Cummins Engine (CMI) to produce engines that run on alternative fuels, such as liquefied petroleum gas, compressed natural gas, liquefied natural gas, renewable natural gas, and hydrogen. The produces the engines for passenger cars, light, medium, and heavy-duty trucks, buses, tractors, and specialty vehicles.
The chart highlights that after trading to a high of $50.19 in March 2012, it was all downhill for WPRT shares. The stock found a bottom at 70 cents in March 2020 and exploded higher. In November 2020, WPRT broke out above its critical technical resistance level at $4.33 per share, the early 2018 high. Last week, the stock moved over the $10 level for the first time since 2014.
At $11.93 on February 12, WPRT’s market cap was just under the $1.63 billion level. An average of over 4.4 million shares trade each day.
Source: Yahoo Finance
Over the past four quarters, WPRT beat estimates and missed EPS estimates twice. The beats came over the last two quarters, where the company posted small profits.
Source: Yahoo Finance
While profits have been elusive, revenues have been trending high from 2016 through 2019. The joint venture with Cummins Engine has been a bright spot for WPRT.
CLNE shares have been just as volatile
CLNE provides natural gas as an alternative fuel for vehicle fleets in the United States and Canada. The company supplies renewable natural gas, compressed natural gas, and liquefied natural gas for light, medium, and heavy-duty vehicles and offers operation and maintenance services for public and private vehicle fleet customer stations.
The chart illustrates that CLNE rose to its record high in 2012 at $24.75 after reaching a low of $1.05 last year in March 2020. CLNE shares broke out above technical resistance at the September 2016 $4.80 high in November 2020 and have powered higher to over $17 per share at the end of last week. The company’s market cap was at the $3.43 billion level. Over 9.15 million CLNE shares change hands on average each day.
Source: Yahoo Finance
The chart shows that the company met or beat EPS forecasts over the past four quarters. While CLNE delivered earnings of 20 cents per share in Q4 2019, the company has been essentially breaking even over the past three quarters. Analyst forecasts are for the same in Q4 2020.
Source: Yahoo Finance
Revenues have been steady from 2017 through 2019, but CLNE’s earnings have been improving.
Alternative energy powers these two companies
TSLA has dominated the EV market, and the trend continues as US energy policy is shifting to a greener path under the Biden administration. Meanwhile, a far stricter regulatory environment will address the emissions that impact climate change. On his first day in office, President Biden canceled the Keystone XL pipeline project and rejoined the Paris climate accords.
More regulations are on the way in the US.
WPRT and CLNE are two companies that offer an alternative to gasoline. WPRT makes the engines that run on compressed or liquid natural gas. CLNE supplies the filling stations. Both stocks have exploded higher since November. In hindsight, it should come as no surprise as the change in administration will force a dramatic shift in US energy production and consumption.
A massive order provides a substantial clue
On Friday, February 5, WPRT shares settled at $8.65.
After the close, Amazon (AMZN) announced it ordered 1,000 engines from the Westport-Cummins joint venture.
The engines will run on renewable and non-renewable natural gas. The order caused WPRT shares to surge at the start of last week.
The chart illustrates that WPRT opened at $12.45 on Monday, February 8, traded to a high of $12.95, and closed the week just below the $12 level. WPRT still has a long way to go before it challenges the 2012 high of over $50 per share. The next technical target is at the July 2014, $18.98 peak.
CLNE is already on its way for a challenge of its all-time high from 2012 at $24.75. The new green era in US energy production and consumption favors these two companies that have experienced explosive growth. WPRT and CLNE were on either side of $1 per share last March. In February 2021, the path of least resistance for both stocks is higher.
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WPRT shares were trading at $11.35 per share on Wednesday morning, down $0.24 (-2.07%). Year-to-date, WPRT has gained 112.95%, versus a 4.47% rise in the benchmark S&P 500 index during the same period.
About the Author: Andrew Hecht
Andy spent nearly 35 years on Wall Street and is a sought-after commodity and futures trader, an options expert and analyst. In addition to working with StockNews, he is a top ranked author on Seeking Alpha. Learn more about Andy’s background, along with links to his most recent articles. More...
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