Thursday’s Stock Market Winners: Sprint, Clean Energy Fuels, Titanium Metals, Westport Innovations

Among the biggest winners in Thursday’s early trading are Clean Energy Fuels (Nasdaq: CLNE), Westport Innovations (Nasdaq: WPRT), Sprint (NYSE: S) and Titanium Metals (NYSE: TIE).

Top Percentage Gainers — Thursday, May 13, 2010
Company Name (Ticker) Intra-Day Price % Gain 52-Week High 52-Week Low
Sprint (NYSE: S) $4.46 +7.5% $5.94 $2.78
Clean Energy Fuels (Nasdaq: CLNE) $17.75 +5.5% $23.70 $7.37
Titanium Metals (NYSE: TIE) $17.73 +3.9% $18.15 $7.16
Westport Innovations (Nasdaq: WPRT) $19.70 +2.1% $20.44 $4.93
*Table includes companies with minimum market capitalizations of $200 million and three month trading volumes of at least 100,000 shares. All percentage returns are listed as of 12:18PM Eastern Standard Time. Click on ticker symbols for up-to-the-minute price quotes and percentage gain data.

A Belated Boost for Natural Gas

When it became apparent a few years ago that the United States was sitting on far larger quantities of natural gas than was previously thought, many questioned why we weren’t all driving gas-powered cars. After all, natural gas is far cheaper than oil, and emits fewer carbon emissions than gasoline. Right now, the Honda (NYSE: HMC) Civic is the only factory-built gas powered car for sale, and is available in only a few states.

#-ad_banner-#Well, a pair of Senators just offered a bill that would stimulate demand for higher natural gas consumption. Their bill would double the credits available to convert fleets to run on natural gas, which would be a sure boost to Clean Energy Fuels (Nasdaq: CLNE), which is up more than +5% in Thursday trading.

The snapback comes a week after Clean Energy’s shares slumped on a disappointing quarterly profit report. Clean Energy has been quickly moving to build dozens of natural gas fueling stations, but has yet to generate much profit from that rising base of stations. You can blame part of it on falling natural gas prices. In its most recent quarter, the company pumped 56% more gallons of natural gas than in the prior year’s quarter, but total sales rose only 30%. And despite the spike in volume, earnings before interest, tax, depreciation and amortization (EBITDA) still totaled less than $1 million for the quarter. The challenge for Clean Energy is to find a way to expand margins as its volumes grow. That might prove to be quite a challenge, especially if traditional gas station operators enter the fray on the heels of this promising legislation. You may want to wait for another pullback in this name, even if you are a believer in this business concept.

Or you can check out Westport Innovations (Nasdaq: WPRT), which saw its shares spike aggressively on Monday in anticipation of the legislation. Westport has partnered with major truck engine manufacturers such as Cummins (NYSE: CMI), Kenworth, Peterbilt, and Volvo to modify traditional truck engines to run on natural gas. Demand is strong: sales rose +24% above year-ago levels in the December quarter, and are expected to have risen more than 40% from a year ago when March quarterly data are released.

The logic for using natural gas to power trucks is even more apparent considering their high levels of energy consumption and outsized emissions of carbon gases. But as was the case with Clean Energy Fuels, Westport Innovation has not yet grown large enough to be sustainably profitable. Perhaps the pending legislation will help it get over the hump. But with both of these stocks, they could just as easily fall back as they could rally. You may want to pick an entry point target and wait for it.


Sprint Inks Another Partner

You’ve got to hand it to Sprint Nextel (NYSE: S). After the wireless service provider saw its rivals such as Verizon Wireless (NYSE: VZ) and AT&T Wireless (NYSE: T) pull away, it has resorted to a never-ending stream of moves aimed at taking back market share. First, it merged with Nextel, though that deal proved to be a disappointment. Then it became a big backer of Clearwire (NSDAQ: CLWR), which aims to provide broadband speeds for wireless data. (The jury’s still out on that one). Then it acquired the customer base of Virgin Mobile, which appears to be a winning move. And now, Sprint is developing a low-cost co-branded service with Wal-Mart (NYSE: WMT). Not a bad move considering that Wal-Mart’s target demographic has the lowest rates of wireless usage.

Investors like the deal, bidding shares up more than +7% in Thursday trading. And they should. Sprint is sitting on ample unused network capacity, so any of these deals does not need to force the carrier to make major network enhancements. The proof will be in the pudding. Sprint execs maintain that better network utilization should yield sharply rising operating cash flow in coming quarters. Sprint’s bulls say that considerable progress has been made on that score, and bandy about $6 price targets. Others question why the company targets the most financially-stressed consumers with its myriad pay plans, and think shares are worth closer to $3. Then again, if unemployment drops steadily, then the newly-employed are likely to find Sprint’s value-oriented pricing plans to be appealing.


Goldman Boosts Titanium

Last week, we suggested that Titanium Metals (NYSE: TIE) could be in for an extended run (though we caution that investors shouldn’t expect shares to rebound to the $40 levels seen back in 2006). Shares are in fact still running, up nearly +4% Thursday thanks to bullish comments from Goldman Sachs (NYSE: GS) regarding all steel stocks. Signs of life continue to re-appear in the moribund industrial sector, and you can expect solid quarterly results from Titanium Metals to keep reflecting that. A break-out into the $20s in coming weeks is looking increasingly likely as analysts take up their global industrial output forecasts.