Westport Innovations Inc. (USA) (WPRT), Cummins Inc. (CMI): When a Bad Quarter Doesn’t Really Matter

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As long as there’s somewhere to get fuel, that is

Which is where Clean Energy Fuels Corp (NASDAQ:CLNE) comes in. Its partnership with privately-held Pilot/Flying J to build out an extensive network of refueling stations, its so-called America’s Natural Gas Highway, is promising to establish more than 300 LNG stations, mostly at existing Pilot and Flying J locations. While Clean Energy Fuels Corp (NASDAQ:CLNE) is an established player in the natural gas refueling business, its primary customers have been historically CNG “return to base” vehicles like metro transit and refuse vehicles. It’s massive expansion into LNG for truckers is a heavily leveraged bet that could reward patient investors will massive growth.

Additionally Shell -B), -A) is also making a serious move into LNG for truckers, working with TravelCenters of America LLC (NYSE:TA) to add LNG fueling lanes at up to 100 existing locations. And while seeing a behemoth like Shell jump in the mix could be enough to spook some investors, it’s important to remember that competition from the “big boys” also serves as validation of the market opportunity. Additionally, Shell’s stability, sheer size, and 5% dividend offers a nice anchor with much less downside risk, compared to the much more speculative Westport Innovations Inc. (USA) (NASDAQ:WPRT) and Clean Energy Fuels. Simply put, Shell is a low-downside, low-upside way to add natural gas to your portfolio.

Foolish bottom line

If this were a baseball game, it would still be the top of the first inning: So far, none of these companies have seen any material benefit from CNG adoption by the trucking industry. With that said, Westport and Clean Energy both could hit a “home run” before the end of the year if adoption is rapid. The success of natural gas as a transportation fuel will be the determining factor as to the future of both of these companies. If truckers don’t make the switch, they both strike out, while Shell and Cummins Inc. (NYSE:CMI) will continue to survive, if not thrive, on their legacy businesses, like a good contact hitter, hitting singles on a consistent basis.

It’s up to you to decide what works for your portfolio: Me? I’m swinging for the fences.

The article When a Bad Quarter Doesn’t Really Matter originally appeared on Fool.com.

Jason Hall owns shares of Westport Innovations and Clean Energy Fuels. The Motley Fool recommends Clean Energy Fuels, Cummins, and Westport Innovations. The Motley Fool owns shares of Cummins and Westport Innovations. Jason is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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