Natural Gas Tech Stocks: NAT GAS Act Speculation Has Investors Excited
So far, 2012 is a bullish investor’s dream…
US markets spent the better part of January and the first few weeks of February going straight up… literally. Due to this broad-based surge, stocks in multiple industries are rewarding investors with stellar gains.
Homebuilders, Biotechs, Solar… they’re all kicking off 2012 with a bang. If you grabbed stocks in these industries in early January, your portfolio is sitting on some hefty profits.
But as hot as those stocks are, another industry is grabbing my attention lately…
What industry is blazing hot right now?
Natural gas technology…
Names like Westport Innovations (WPRT), Clean Energy Fuels (CLNE), and Fuel Systems Solutions (FSYS) are treating investors to eye-popping 2012 gains. All these names are up over 30% year-to-date. And believe it or not, FSYS is up 65% since the start of the year.
Clearly, investors are chomping at the bit to get their hands on these stocks.
But here’s where it gets interesting…
There’s no stock specific news to support the huge rally in this industry. A few moderately bullish news headlines crossed the wires, but nothing that accounts for those kinds of returns.
So what’s going on… why are investors pushing FSYS, WPRT, and CLNE through the roof?
Is the broad market rally just dragging these stocks higher?
…well, it’s certainly helping.
But that’s not the whole story…
In my opinion, speculation the NAT GAS Act is on the verge of passing is pushing these stocks higher. All three of these companies would benefit greatly if this long-awaited bill finally passed through Congress.
What’s the NAT GAS Act, you ask?
It’s a tax reform bill providing hefty incentives for US trucking companies who switch to natural gas powered engines. Of course, companies with natural gas engine and fueling technology will be big beneficiaries if the bill passes.
For example, WPRT makes cutting edge natural gas fuel systems. Their products are so good they’ve built strategic partnerships with some of the biggest engine makers on the planet. Both Caterpillar (CAT) and Cummins (CMI) utilize WPRT’s technology.
Passage of the NAT GAS Act would put millions of WPRT’s engines on the road over the next decade. Without question, that would be a huge boon for the company.
And what about FSYS?
FSYS has similar natural gas fueling technology and products. However, the company doesn’t have the same high-quality big-name partnerships as WPRT. That fact kept this stock under the radar of most investors in 2011.
But something’s clearly changing in 2012…
Not only are individual investors jumping all over FSYS, company insiders recently bought shares on the open market. From February 7th to the 9th, insiders grabbed nearly $9 million worth of FSYS at an average price of $23.75.
Now remember, insider buying is very bullish for a stock. After all, insiders know the inner workings of their company. And if they’re purchasing shares on the open market, it’s a great sign the company’s stock is undervalued.
Speaking of purchasing shares, do these stocks belong in your portfolio?
A switch to clean burning and abundant natural gas would be a big plus for our country… and investors in the companies I just talked about.
But here’s the thing…
Even if the NAT GAS Act doesn’t pass, the economics of natural gas powered engines still makes sense. In fact, private industry is already moving towards natural gas engines… without government tax incentives.
That’s why I feel natural gas technology stocks hold some of the biggest profit potential the market has to offer over the next few years.
However, I’m very careful buying stocks after a huge rally…
Much like the broad market indexes, all three of these stocks are due for a pullback. But once these stocks consolidate their recent gains, I’ll be looking for a low-risk entry point to ride these stocks higher.
Maybe you should too…
Category: Commodities
