Quick post... The pitfalls of growth stocks

So I made a big bet on Westport (WPRT) and thus far I have been wrong. LOL!  That's the risk you take when investing.  I moved in hard in the low 30's and have been punished by the short sellers.  Westport's earnings call for Q1 2012 on Tuesday was actually quite good in terms of progress.  I know they lost more money than they did vs. last year's quarter, but they are increasing sales quite nicely.  I think this stock has been taken down beyond what is right.  I know the nay sayers would argue that this company hasn't turned a profit in years, but you have to fuel the growth some how!  You need cash.. And enough cash is what they have.  If their wasn't progress than I would say the heck with this stock.  I believe Westport will surprise everyone especially the short sellers in the coming weeks.  I'm looking for a short squeeze in the near term.  There needs to be a catalyst to change the aggressive downward trend.  I'm confident WPRT's management will  have some good news to get the big fish investors back on board.  Plus a change needs to be made because I'm sick of losing money! 

I'm still a big Westport Innovations fan even if I lose a little cash in the short term.  I didn't expect this high growth engine to get cut in half in the past few months, but it happens to the best of them.  The thing with growth stocks is as followed...

When any negative news poses a threat to the growth of a fast growing company investors do not hesitate to turn on a once loved company.  The money will flow out like a huge hole in a boat and the short sellers will step in to accelerate the downturn.  When this happens the momentum takes over and stocks go down until the sellers are exhausted.  This is what happened to Westport.  Other growth companies have gone through the same thing.  Here are just a few stocks that had similar rapid downfalls.

Starbucks (SBUX)
Hansen Natural (MNST) AKA Monster Energy Drinks
NetFlix (NFLX)
Taser (TASR)

A few of the companies have rebounded nicely from when they plummeted, but rapid growth can't continue forever and neither can straight up stock prices.  It hurts to see your money slip through your hands from time to time, but the excitement of catching the next big trend is always worth the risk in my eyes.

Stay positive with WPRT.  Loyal shareholders will prevail.

Have a great night!

Clay-


Full Disclosure

Current Holdings:
Cosi Inc. (COSI)-Monster Portfolio
Caterpillar (CAT)
Westport Innovations (WPRT) Monster Portfolio
Kinder Morgan Energy Partners (KMP)

I'm not a licensed financial advisor. All recommendations is strictly my personal opinion and the information is intended for learning purposes only. Invest at your own risk!