Westport Innovation’s correction may be ending, says Horizon’s Vialoux

Don Vialoux, research analyst at Horizons Investment Management, says the recent correction in shares of Vancouver’s Westport Innovations may be nearing an end. On Friday, Don Vialoux, research analyst at Horizons Investment Management, appeared on BNN’s Market Call with host Mark Bunting to talk about stock seasonality and technical analysis.

Vialoux, who says he is in 90% in cash, thinks an important an important market inflection point is coming in the next three weeks.

While he believes Europe will continue to cause volatility, the Horizons fund manager believes there is a strong chance markets could move decisively upward before the end of July. The reason for this, he says, is that the upcoming earnings season is not expected to be a good one. But once that bad news is out of the way, the markets should move higher because of the “presidential” cycle; the tendency for the stock market to rise in election years. Vialoux believes the North American markets hit their low point on June 4th and will continue to be choppy in the coming weeks.

One stock Vialoux likes from a technical standpoint is Vancouver-based cleantech Westport Innovations (TSX:WPT). Vialoux says that after a sharp correction, Westport is looking like it is bottoming. Noting that the stock has consistently outperformed the TSX, Vialoux says Westport is “starting to show signs of regaining momentum at these levels.”

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Westport Innovations grew out of a research project at the University of British Columbia’s Mechanical Engineering Department. A professor there, Philip Hill, was developing a concept called high pressure direct injection (HPDI) of natural gas. In 1994, Hill met current Westport CEO David Demers. The following year, with HPDI technology as its principal strategic asset, Westport Innovations was formed. Today, the company boasts a market capitalization of more than $1.7-billion, has attracted legendary investor George Soros as its largest single shareholder, and has created valuable partnerships with some of the world’s largest engine and vehicle manufacturers, such as Volvo, Kenworth, and Cummins.

While Westport’s topline numbers are soaring, it is still losing money. The company reported revenues of $88.6-million for its Q1, 2012, which was 132.5% increase over the $38.1-million the company posted a year prior. Westport lost $22.6-million, or $.44 cents a share in the quarter, which it reported May 8th.

Shares of Westport Innovations on the TSX closed Friday up 2% to $32.47.

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