Westport Innovations (WPRT) and Clean Energy Fuels Corp (CLNE) Team Up; Should You?

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Clean Energy Fuels Corp (NASDAQ:CLNE) and Westport Innovations Inc. (USA) (NASDAQ:WPRT) agreed to a deal and to join forces through a marketing campaign to help ignite the future of natural gas. On June 28 Westport Innovations agreed to buy two of Clean Energy Fuels Corp (NASDAQ:CLNE) subsidiaries, BAF Technologies and ServoTech Engineering, to enhance their powerful product and patent portfolio and tighten their ties with Ford Motor Company (NYSE:F). Westport Innovations Inc. (USA) (NASDAQ:WPRT) continues to be a buy as it strengthens its ties with the automotive world while becoming the number one choice for natural gas engines.  Westport may not be profitable at the moment but it will likely pay the patience investor huge dividends in the long run.

Clean Energy Fuels (CLNE)Credit: Clean Energy Fuels Corp (NASDAQ:CLNE)

With this deal Westport Innovations Inc. (USA) (NASDAQ:WPRT) believes they will now have the largest product portfolio and market presence in North America as it relates to light duty natural gas vehicles. This purchase makes Westport Ford Motor Company (NYSE:F)'s largest partner through the Qualified Vehicle Modifier program, which offers ten different products and gives Westport presence in roughly 150 dealerships. Westport Innovations Inc. (USA) (NASDAQ:WPRT) will now be able to make its mark on the California market which includes transit, cargo shuttle and taxi vehicles and other natural gas vehicles. Before Westport was only installing its Westport WING Power System on the Ford F-250 and F-550 series.

Why invest in either Clean Energy Fuels or Westport?

We are starting to see a turn in the public and private sectors towards natural gas. Los Angeles started making the transition to natural gas with its first natural gas purchase in 1995. In 2011, Los Angeles retired its last diesel bus and is now entirely a natural gas fleet and is the largest natural gas bus fleet in the nation and it is estimated the entire fleet has logged more than one billion miles. The decision to change came down to cost and the goal to reduce emissions which is not an uncommon trend. United Parcel Service, Inc. (NYSE:UPS) agreed to buy 700 natural gas 18-wheelers through Westport and Cummins Inc. (NYSE:CMI)'s joint venture, which will add to its 1,000 natural gas trucks worldwide.

This joint venture lends a great learning opportunity for Westport Innovations Inc. (USA) (NASDAQ:WPRT) to gain invaluable knowledge from Cummins.  Cummins is a global powerhouse serving customers in more than 190 countries. Cummins earned $1.65 billion on sales of $17.3 billion in 2012. On July 9 Cummins announced a 25% increase in their dividend. As stated by their CEO and Chairman, Tom Linebarger, "The increase in our dividend, combined with our current share repurchase program, reflects our confidence in the long-term prospects for the Company and demonstrates our commitment to increasing returns to shareholders. With today's announcement we have increased the dividend by a total of 257% over the last four years, while continuing to invest in products and our global footprint that will drive future profitable growth." Westport Innovations Inc. (USA) (NASDAQ:WPRT) will need to learn from Cummins Inc. (NYSE:CMI) and figure out how to become a powerhouse in their own right as they have one the most advanced natural gas engines and vehicles line which is protected by their extensive patent portfolio.

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