A play on the natural gas fairy
Westport is a terrific spec trade, but it's a bit fanciful to think the natural gas shift will happen on its own.
I'm torn about Westport Energy (WPRT). There's no doubt that it is a terrific speculative trade, as long as natural gas remains low. Judging by the glut, that's going to be a multiyear forecast. Even if natural gas goes $2 higher, it will still have the edge on diesel.
Plus, I think CEO David Demers has done a remarkable job getting the company to establish a joint venture with the right guys: Volvo, Caterpillar (CAT) and, of course, Cummins (CMI). His deals with General Motors (GM) and Ford (F) are remarkable as well.
But I think it's a bit fanciful to think the market will shift to natural gas engines on its own. The U.S. doesn't have enough filling stations. Not enough incentives are offered, given the high upfront costs. Plus, natural gas doesn't have the support that the government gives electric and ethanol, support so monstrous and demonstrable that everyone in every part of the food chain has to be on board for it.
This shift has to be a national purpose. It has to be a national goal to become a reality. It's just unrealistic right now for anything wholesale to come of this. We aren't seeing anywhere near the level of change in infrastructure or the short-term incentives to switch.
And we know neither presidential candidate endorses any subsidies for the fuel -- even ones that should pay for themselves, as the Natural Gas Act that Boone Pickens fathered would have done.
Regardless, it is true that Westport could still make it big. Further, despite mild protestations from Demers that things are happening fast here and that it will work sooner than I think, it is China that seems to have the all-out government support for cleaning the skies and kicking the OPEC habit. And you wonder why they are such a threat to us. They aren't going to let their country be hostage to OPEC -- and us?
I don't think either candidate even thinks it is possible that we could break OPEC's hold on things. I know that, because it isn't possible without natural gas as our surface fuel.
So understand this: As much as I was behind Westport all the way, I now recognize that it has to be bought on one of these pullbacks that affect all speculative plays. It can't just be bought on the hope that the natural gas fairy will one day buy several hundred thousand truck engines using Westport technology.
Jim Cramer is a co-founder of TheStreet and contributes daily market commentary to the financial news network's sites. Follow his trades for Action Alerts PLUS, which Cramer co-manages as a charitable trust and has no positions in stocks mentioned.
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Cramer doing a blog on Gas.
Who else is more full of the stuff than the Guru of Loosers himself !!!
If we really want to convert to NG the first move the government has to make is dropping direct subsidies for electric and ethanol as well as any others for any form of commercially viable sources. That would allow the market to move according to real (as opposed to manipulated) demand.
Hey Cramer, how about using your mouth for something constructive and calling for the Feds to get out of the markets altogether?
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Serious issues like drought and the deterioration of the developed world spell opportunity for this industry leader.
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