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Low-Carbon Value Investing: 1 Tech Leader Set to Thrive

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Westport Innovations (TSX:WPT) is a global company focused on engineering, manufacturing, and supplying alternative fuel systems and components for transportation applications. The company’s diverse product offering is sold under a wide range of established global brands and enables the use of a number of alternative fuels which provide environmental and economic advantages.

The company supplies products in more than 70 countries through a network of distributors and service shops and directly to original equipment manufacturers (OEMs) and OEM suppliers. Westport is well-positioned to increase revenues and market share as new stringent environmental regulations mandating greenhouse gas emission and common air pollutant reductions have been introduced in key markets around the world.

Significant operational competency

Further, Westport is leveraging the company’s market-ready products and customer base to capitalize on opportunities. In addition to the company’s significant operational competency in well-established transportation markets, Westport’s development of new technologies provides it with a premier technology leadership position which is expected to drive future growth. The company has a track record of innovation, specialized engineering capabilities, and a deep patent portfolio resulting in a strong intellectual property position.

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Clean transportation products

Recently, the company has pursued strategic technological investments which advance Westport’s products and capabilities to maintain the company’s market leadership position. The company has been able to optimize Westport’s industry-leading product portfolio by offering full systems and conversions in addition to standalone components.

Westport’s global footprint allows it to leverage the company’s capabilities to serve customers through product localization and after-sales support. By partnering with OEM, Westport leverage the company’s manufacturing, distribution, sales, and aftermarket service capabilities, thereby driving economies of scale through the company’s business system.

Unique innovative solutions

Compared to other primary energy use sectors, including industry and buildings, transportation is the most difficult to de-carbonize because of the challenge of economically replacing the energy density of fossil fuels. The company’s alternative fuel expertise has made it an attractive partner for customers needing market-ready, commercially available solutions to respond to customer demands and meet increasingly stringent regulatory frameworks.

A combination of Westport’s considerable investment in research and development and the company’s team of world-class engineers are responsible for the company’s unique innovative solutions and differentiated intellectual property that allows it to attract and partner with leading global engine and vehicle OEMs in the transportation space.

Market-leading position

Also, the company’s global patent portfolio has been pivotal to Westport’s market-leading position and serves as a significant barrier to new entrants. In order to maintain technology leadership, Westport explores product improvements and new product opportunities in each of the segments it serves to ensure that the company’s portfolio evolves to meet market dynamics.

The company’s gaseous-fuelled engine technologies, cryogenic fuel systems, and experience should allow it to exploit opportunities that may arise related to emerging low-carbon fuels such as synthetic gas and hydrogen. Westport has also established several strategic partner relationships with key automotive, and infrastructure providers.

These relationships provide strategic value to Westport by enhancing the company’s global market access and distribution channels to better serve end-users.

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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Nikhil Kumar has no position in any of the stocks mentioned.

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