In proposed legislation introduced by Senator Harry Reid yesterday, it was clear that the natural gas fuel providers and parts suppliers may be big beneficiaries. Along with establishing a Nat Gas Vehicle and Infrastructure Development Program within the DOE, nearly $4 billion in rebates would be provided to purchasers of nat gas vehicles as well as another $2.5 billion for grants for infrastructure and R&D.
Andrew J. Littlefair, Clean Energy President and CEO, said, “We applaud our congressional leaders in the Senate and the House for bringing this vital legislation to the forefront. It will help fund natural gas vehicle purchases, particularly heavy-duty trucks, support growth in natural gas fueling infrastructure nationwide, and provide loans to support domestic manufacturing of alternative fuel vehicles.”
So how to play this legislation? I’m a big fan of the two most well known natural gas fuel stocks here – both Clean Energy Fuels (CLNE) and Fuel Systems Solutions (FSYS). T Boone Pickens’ CLNE is probably the best play and it recently broke out of a double bottom base with good volume on Monday, presenting a nice entry point after pulling back in the last two days. One that many maybe aren’t familiar with is Westport Innovations (WPRT) (see below)
Another good play is Fuel Systems Solutions (FSYS) which makes natural gas fuel conversion kits. No word on whether conversion kits would be eligible for a rebate. If any readers know the answer to this please let us know in the comments. Not quite the pure play that CLNE is, but it’s mighty attractive down at these levels, having corrected 50% since the beginning of the year and finding significant support around the $25 level.
The third play is Westport Innovations (WPRT) which makes the engines and fuel injectors that go into nat gas vehicles. This may be a huge beneficiary as more car and truck manufacturers look to manufacture nat gas vehicles. WPRT currently has a partnership with Volvo. It’s no coincidence that the stock broke out to a new all time high on Monday, but sold off hard today after a torrid run in the past month. It may provide another attractive entry point soon.