Westport Innovations Inc. (USA) (NASDAQ:WPRT)’s sales have increased from $25 million to $156 million over the last decade. Westport and Clean Energy have yet to achieve profitability, and as such, are still considered to be speculative stocks with enormous reward potential.
A safe and effective way to invest in NGVs and the natural gas industry
Natural gas is a clean, abundant, convenient, and affordable fuel. Recent discoveries and technological advances have significantly increased U.S. natural gas supplies, resulting in very attractive prices. Natural gas prices are projected to remain low for the foreseeable future, resulting in a large boost in demand. If NGVs become a major player in the transportation industry, the demand for natural gas will ramp up even further.
A very effective way to profit from this increased demand is by investing in natural gas pipeline companies. Pipeline companies are not affected by the commodity cost but indirectly benefit from low natural gas prices because it translates into more product flowing through their pipelines due to increased demand levels.
Kinder Morgan Inc (NYSE:KMI) is one of the better investment opportunities in the natural gas pipeline industry. Kinder Morgan owns the largest network of natural gas pipelines in the U.S., consisting of 62,000 miles of pipelines. In addition, Kinder Morgan owns a wide variety of additional assets such as natural gas storage and liquid petroleum pipelines.
Kinder Morgan Inc (NYSE:KMI) is not directly involved in the NGV industry, but the increased demand from NGVs will result in an increase in the volume of product flowing through its pipelines, boosting its bottom-line.
Kinder Morgan is a very popular dividend paying company. Its current dividend yield is 4.2% and it has impressively increased its dividend for seven consecutive quarters, from $0.30 to $0.40.
Patience Fools!
If the NGV industry continues to grow and eventually expands into the general population, investments made in the industry today could lead to enormous, life-changing returns over the next decade. However, there may (or may not be) a significant time lag in the development of the industry and it may take off next month, next year, or the next decade. As always, it is possible that the NGV revolution does not pan out, so invest accordingly.
Westport Innovations and Clean Energy are two excellent opportunities to take advantage of the great potential of NGVs, and Kinder Morgan is a compelling, indirect, and safe way to invest in the NGVs as well as the overall natural gas industry.
Greg Williamson owns shares of Kinder Morgan and Westport Innovations. The Motley Fool recommends Clean Energy Fuels, Kinder Morgan, and Westport Innovations. The Motley Fool owns shares of Kinder Morgan and Westport Innovations.
The article The NGV Industry May Be Ready to Take Off originally appeared on Fool.com and is written by Greg Williamson.
Greg is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.
