Cummins is North America’s leading supplier of natural gas-powered engines for buses and similar vehicles, and the company remains our favorite way to play growing consumption of natural gas as a transportation fuel.
Investors interested in this trend often ask my opinion of Westport Innovations (TSX: WPRT, NSDQ: WPRT), a smaller-capitalization name that produces natural gas-powered engines.
Although Westport Innovations’ fuel systems represent an important technological development, the company is a chronic money loser. Meanwhile, Cummins and Westport Innovations in 2001 formed a 50-50 joint venture to design and manufacture 6- to 12-liter heavy-duty engines that run on natural gas.
In other words, an investment in Cummins gives you exposure to the future of natural gas-powered engines without the inherent volatility of Westport Innovations.