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Westport (WPRT) a Must Add to Your Portfolio: Here's Why

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Westport Fuel Systems Inc. (WPRT - Free Report) is performing impressively at the moment. Also, we are optimistic about the company’s prospects and believe the time is right for investors to add the stock to their portfolio.

Let’s take a closer look at the factors that make this Zacks Rank #2 (Buy) stock a compelling choice for investors right now. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Westport has outperformed its industry over the past year. The stock has gained 63.4% compared with the industry’s 32.2% growth.

What’s Driving WPRT?

With rising demand for environmentally-friendly vehicles, original equipment manufacturers (OEMs) are expanding their alternative fuel vehicle offerings. With this, Westport has a suite of market-ready alternative fuel products across all segments of transportation.

The firm continues to benefit from stricter emission regulations and is cashing in on this with a portfolio of offerings that will help automakers meet the requirements, without having to allocate significant capex. Westport’s offerings provide 20% reduction in CO2 — exceeding the 2025 target of 15%. The company is expected to gain market traction, with the adoption of low-carbon renewable natural gas that can seamlessly work with HPDI 2.0 technology.

Along with launches and collaborations, Westport invests in technologies which are likely to boost its prospects. Westport’s HPDI 2.0 technology enhances the performance of heavy-duty trucks without harming the environment. The product has been launched in Europe and China, in partnership with China’s Weichai . Per the production agreement with Weichai, Westport will develop and commercialize natural gas engine based on one of Weichai Power’s heavy-duty engine platforms. This will enable it to increase market share in China’s heavy-duty truck market. The company’s 50:50 joint venture with Cummins (CMI - Free Report) also aids in product development in the North American market, boosting its top line.

Moreover, Westport’s divestments deal to streamline its portfolio and use the proceeds to tap onto more profitable business is impressive. In July 2018, the company sold the Italy-based compressed natural gas compressor unit to Snam S.p.A. for $14.7 million. In 2017, it divested assets of Industrial and Auxiliary Power segment for $87.5 million and $70 million, respectively. These divestments are in line with the company’s focus on the transportation sector.

Another Key Pick

Investors can consider another top-ranked player in the same industry, SPX Corporation (SPXC - Free Report) , carrying a Zacks Rank #2, at present.

SPX has an estimated earnings growth rate of 8.09% for 2020. The company’s shares have surged 93.8% in a year’s time.

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