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Weekend Edition

A major milestone for natural gas investors
Saturday, October 13, 2012

 The first-ever Natural Gas for High Horsepower Applications Summit just concluded in Houston. That this event even exists is bullish for natural gas. But an announcement from Caterpillar's director of gas engine strategy, Joel Feucht, stole the show...
 
Caterpillar is the world's largest manufacturer of construction and mining equipment. If there's earthmoving to be done, chances are good you'll find the company's bright yellow machines on the job. Only soon, they'll be powered by liquefied natural gas (LNG)...
 
Houston's Rock Hill Herald reports Caterpillar has "decided to go all in on gas." Feucht told the conference, "We see a global market long term. Large engines are going gas. It's not debatable. It's our conclusion." (My colleague Larsen Kusick told Growth Stock Wire readers about this announcement earlier this month.) 
 
The company's first LNG-powered vehicles will be large mining trucks and locomotives. Caterpillar expects to launch the vehicles within five years.
 
 To expedite LNG-powered product development, Caterpillar has teamed up with LNG-engine-maker Westport Innovations (NASDAQ: WPRT). Longtime readers know this company well. Here's what Frank Curzio wrote about Westport in the May issue of his Small Stock Specialist advisory...  
 
Sales are expected to grow north of 50% annually over the next five years. The company projects profitability by 2014. But that could happen sooner as more trucking fleets save millions of dollars a year in fuel costs by switching their engines over to natural gas.
 
From a common sense perspective, Westport has partnerships with the world's largest engine makers. Together, these companies have a combined market-cap north of $110 billion... Yet Westport's market-cap is a mere $1.3 billion.
 
Based on the trucking industry's [energy] megatrend, Westport should see huge demand for its engines for decades to come.
 
Although Frank does not currently have an open Westport position in the Small Stock Specialist model portfolio... subscribers who followed his previous recommendations did very well. In April, subscribers booked a 116% gain 14 months after Frank's original February 2011 recommendation of Westport. A month later, he opened a new Westport position in the model portfolio... and closed it out four months later with a gain of about 45%.
 
 Longtime readers are familiar with Frank's natural gas boom thesis... He believes the low price of natural gas will make it an affordable alternative to diesel for heavy-duty trucks.  
 
Frank has told Growth Stock Wire readers about several ways to profit off this trend, including Westport and Clean Energy Fuels, which owns natural gas fueling stations.
 
And GM and Chrysler Group are already planning to build natural-gas-powered pickup trucks. Industrial conglomerate 3M has partnered with natural gas giant Chesapeake Energy to develop cost-efficient natural gas fuel tanks. And even ferryboat operators in the U.S. and Canada are considering switching to natural gas. Caterpillar's announcement is another major milestone in the country's switch to natural gas as an alternative transportation fuel.
 
 But Frank's thesis extends beyond the domestic natural gas industry. Around the world, demand for natural gas is soaring.
 
Consider the case of Japan...
 
 In March 2011, an earthquake and tsunami destroyed Japan's Fukushima Daiichi nuclear facility, causing a meltdown in three of its reactor units and the release of radioactive material. One of the worst nuclear disasters in history, the meltdown spurred Japan – which currently generates 30% of its energy from nuclear power – to reconsider its energy plans.
 
On September 14, Japan's government voted to shut down all of its more than 50 nuclear reactors by 2040. It was a drastic, unanticipated decision. (European countries including France and Germany subsequently also announced plans to decrease their reliance on nuclear energy.) 
 
 Of course, the Japanese aren't reducing their electricity consumption. And the leading candidate to replace nuclear fuel is natural gas. (Frank told readers about Teekay LNG, a natural gas shipping company that should benefit from this trend, too.) 
 
The same day Japan announced it would shutter its nuclear operations, it signed a $13 billion agreement with Russian energy giant Gazprom to build a new LNG export facility in eastern Russian port Vladivostok.
 
And just a few months ago, ExxonMobil said it would spend $15 billion to export natural gas from Papua New Guinea (the first delivery is expected by 2014). Exxon also announced a joint venture with Qatar Petroleum to build an LNG terminal in Texas. It's awaiting U.S. government approval for the project, which would cost $10 billion.
 
 Clearly, the world is about to spend a fortune building the infrastructure to support a boom in natural gas. Analysts with investment bank JPMorgan expect $220 billion will be spent on LNG projects in the next two years... And they produced that estimate before Japan and France announced they would cut their nuclear programs.
 
In his latest issue of Small Stock Specialist, Frank recommended a "nuts and bolts" play on the global side of this thesis. The company is the go-to business governments and global energy giants are using to help build and operate giant natural gas projects. And thanks to a major, worldwide trend, this company is about to make tons of cash.  
 
Frank says the stock could double in the next few years... To learn more about this energy megatrend and gain access to the report detailing Frank's latest recommendation, click here.
 
Regards,  
 
Sean Goldsmith




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