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Clean Energy Fuels (NASDAQ: CLNE) – A value play in the gas crisis?
Stock Ticker
CLNE ($CLNE)
Stock Name and Stock Trading Exchange Platform
Clean Energy Fuels Corp – NASDAQ (NASDAQ: $CLNE)
– Capitalcom
Stock Sector
CLNE is a natural gas producer that is focused on the provision of clean gas to power vehicles. It takes a different approach by providing sustainable energy with eco-friendly natural gas.
Renewable natural gas (RNG) is its novel product, made up of organic waste, and is the largest provider of RNG in North America.
It also houses Compressed natural gas (CNG) and Liquefied natural gas (LNG).
CLNE is equally in the logistics business of transportation and fuel delivery stations.
The company also provides a wide range of services including Facility Modifications, Virtual pipeline services, Station construction, and more.
It was founded in 1996 by T. Boone Pickens and Andrew Littlefair. It is headquartered in California, US.
Recent Most Important News about Clean Energy Fuels (NASDAQ: CLNE)
The natural gas market has been on a wild ride this year. The Ukraine crisis launched petroleum prices to the moon, reaching new highs.
The price has now eased back due to recessionary fears and hence a reduced demand.
CLNE is strategic in filling the niche of energy independence by providing cleaner and cheaper alternatives. RNG has been embraced after the crisis and is tipped to explode.
The stock has taken a beating this year as the rally in the energy markets mostly benefitted conventional explorers.
The corporation is celebrating its 25th anniversary of operations. It is actively working with partners in the trucking industry to provide clean fuel.
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A new RNG station was officially opened in Ohio, signing a deal with Amazon.
A major milestone was accomplished last month, with the First ever LNG-powered ship inaugurated. CLNE provided the clean fuel for the launch.
The RNG sector is growing rapidly and CLNE is at the center stage to propel it further.
Massive capital is being poured into the sector as an alternative to Energy shocks is becoming increasingly necessary. CLNE has bagged new fuel contracts and RNG developments.
CLNE is a ‘hot stock’ at this moment as it could be pivotal in the energy transition.
Current Position of Clean Energy Fuels (NASDAQ: CLNE)
CLNE is on top of the world! At least regarding the Oil & Gas refining and marketing industry, where it ranks as the highest overall rated company with a score of 75.
The company has been publicly trading for 15 years and is one of the movers in the sector. Clean Energy is here to stay, and world governments are gravitating in this direction.
Early this year, the Ukraine invasion favored the company as the price rose. It has however come crashing down as a result of the market woes.
CLNE operates domestically in the US and North America. It runs a B2B model with its main clients made up of Airports, Trucking companies, ports, and others.
Consumer demand is also met through its several stations across the states (at least 550).
With Energy prices going through the roof, cheaper, cleaner, and available solutions are heavily sought after. The US government is enacting laws that advocate for the use of clean energy.
Historically, there has been a monopoly in energy, with a few companies dominating the markets.
This is fast changing as the geopolitical tension and innovations in renewables is seeking to change the old narrative.
Renowned tech mogul Bill gates is going big on clean energy and believe this is the future. He is personally funding multiple start-ups to revolutionize the sector.
Natural gas in the US brought electricity prices down and that is the challenge for renewables cause that’s what there compared against,
Mr. Gates told the WEF.
CLNE is integrating the two, Renewables and gas. Natural gas contributes up to 52% of the total energy needs in the US.
While the company is involved in natural gas, RNG is its most prospective output.
It has patented a technology called Zero now solution, which combines the cleanest fuel in the world with the latest clean engine technology.
The company is revealing large, exciting projects to drive its goal. It partnered with California transportation dynamics to supply over 1.2M gallons of RNG for its trucks.
Additionally, it is working with cities, states, and private enterprises to provide them with affordable solutions.
Oil supermajor Total Energies SE ($TTE) has a significant stake in the company and is working on a joint venture, together with another Supermajor BP to tap Biofuels from dairy farmers.
CLNE is moving away from fossil fuels by utilizing these Biofuels such as methane, a leading greenhouse gas, to produce RNG.
Natural gas has risen dramatically this year and expectations by experts are that the trend could worsen this coming winter as heating demands increase.
It reached a 14-year high last month. RNG is now extensively used in transportation by heavy-duty vehicles. It can also be used for cooking and heating.
It is a zero-carbon source and even sub-zero, as it removes methane from the environment.
Stock Price Chart Clean Energy Fuels (NASDAQ: CLNE)
CLNE Stock Price Chart
The stock has followed the energy markets with booms and busts throughout this year. It currently seats at $4.89 as of the 13th of October 2022.
$CLNE hit a high of $9.50 in November last year and reached north of $8 in the rally this year. It is now back to annual lows, bracing for the next Upside.
For a small-cap stock, $CLNE’s current price is justified and greatly undervalued, considering it’s just a little shy of crossing the $2B, once an all-time high.
The stock performance is negligible in the short term but a sure win in the long haul. It has returned over +103% to investors in the past five years.
It has however suffered a market sell-off and massive shorting which led to a drastic fall in price. Technical indicators are neutral on the stock.
Sentiments on Clean Energy Fuels (NASDAQ: CLNE)
The company is pursuing many projects at the moment and has penned deals with large investors. Institutional holding makes up 46% of the stock and this works both for and against them.
Negative sentiments are pushing the price down, despite rapid developments in its underlying activity. Scotiabank initiated coverage with an outperform and a median $13 price target.
Faith in management is almost non-existent by the general public, who feel sour on the status quo of its weak margins.
As luck would have it, CLNE is at the forefront of the coming wave of change, and this will certainly turn the tables.
It receives free advertising/marketing from mainstream media and the government is heavily backing green initiatives.
Pros of Investing in Clean Energy Fuels (NASDAQ: CLNE)
- Budding growth – From new digesters, new Amazon stations, LNG cargo ships, and more capital in the company, make it one of the fastest-growing green energy players.
- Cheaply valued – The stock is insanely cheap at the moment, almost a penny stock at this point. This is a good long-term safety net.
- Government-oriented – It is aligned with federal initiatives and thus will savor advantages like subsidies, credits, cuts, and other incentives.
- A clean solution – RNG is said to be the future of energy as the price of natural gas shoots up more than crude. CLNE, therefore, has a working solution for heavy-duty transportation and similar industries.
Cons of Investing in Clean Energy Fuels (NASDAQ: CLNE)
- Long timeline – Its activities are time-consuming and could take years to complete. The return period will be equally long, requiring patience.
- Stiff Competition – It not only has internal rivals like Northwest natural and MYR Group, but it also similarly faces external competition from EVs which are the most preferred clean transportation solution for passenger cars.
Profits for Clean Energy Fuels (NASDAQ: CLNE)
After 25 years of operations and 15 years of being publicly listed, CLNE is yet to post a profit.
This has not pictured the company in the best light, but the wave of change in energy might just be the long-awaited breakthrough.
The company announced its quarterly earnings at the end of August. It was good progress from their previous results.
EPS estimates were crushed by +100%, with diluted EPS recorded at -0.06. Revenue for the quarter slightly missed expectations by -3.6%, coming in at $97.2M, exponentially rising by +20,000% YOY.
Net income also increased by a solid +83%, recorded at -$13.24M. The net profit margin ticked higher by +99.9%, registered at -13.61%. EBITDA also rose spectacularly by +97.6%, valued at -$1.62M.
The balance sheet for the company is pretty tight with room for growth. The company has significant debt, leveraging to enable growth.
Some might say it’s overleveraged, but its liabilities are fixed and long-term, with a debt-to-equity ratio of 0.1072.
Despite the not-so-rosy situation in profits, this is one of the best-positioned clean energy companies for the future. It will certainly take time to pick pace but will be most rewarding once its goals are achieved.
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The company has the advantage of its institutional shareholders who fund its operations regardless of the economic conditions.
This is because energy is resistant to these difficult periods and the rally in the markets this year has proven just that.
Free cash flow is to the tune of $10.70M. The financials might not be very attractive at the moment but will likely change for the better very soon.
Growth Likelihood and Potential for Clean Energy Fuels (NASDAQ: CLNE)
CLNE is a future play that was ahead of its time. The resistance to switching to clean energy has hampered its potential for a long time but is now in its favor.
With the wealth of experience accumulated over the years, it stands in a better position than the new start-ups that are jumping on the boat.
CLNE is not the typical momentum company trying to chase the new big thing. It has seen a lot of bull and bear cycles in the market, therefore well prepared to face the next one.
Blackrock, arguably the largest fund manager in the world, gave the outlook for these inflationary markets.
US head of thematics Jay Jacobs came out with what he believed to be the best-performing sectors in the current turbulent market.
Clean energy was one of the three shortlisted sectors and CLNE was a particular recommendation in the sector.
The other two sectors were agricultural technology and infrastructure, which CLNE also contributes to partially.
Jacob stated:
In an inflationary environment like we see today, that’s beneficial to those existing clean energy resources, where they’ve already paid the cost.
The company has a strong client base made up of established corporations like UPS, Amazon, and more.
CLNE is therefore well positioned to capitalize on the clean energy boom as evident in its name.
While EVs have worked as a viable solution for passenger vehicles, it still has their problems and the batteries pose a risk to the environment, comprised of toxic materials.
Moreover, EVs are not feasible for large trucks and heavy-duty vehicles at the moment as development is still ongoing.
RNG is the best available solution for clean energy for large facilities and vehicles.
Management of the company can be put into better hands if its board sees fit. It is founder-led, and the team is near retirement, so leadership changes are to be expected soon.
Paul Cheng of Scotiabank opines that the stock is a fine pick. He says:
As the leading natural gas fuel distributor in North America, CLNE is in a prime position to fuel the transportation sector transition to renewable energy.
He further added that:
The company’s long-standing relationships with feedstock owners and fleet operators established over its 20 years in the industry provides the basis for growth in key customer markets along with securing additional RNG supply.
CLNE is therefore not only a disruptor in the space but a leader as well. With the fallen price the stock is poised to be a multi-bagger, as the era of clean energy begins.
Overall Verdict on Clean Energy Fuels (NASDAQ: CLNE)
Clean Energy Fuels (NASDAQ: CLNE) – A value play in the gas crisis?
The stock is a winner in the next decade, which is said to mark the inception of clean energy. Four analysts covering the stock recommend 3 buys and 1 hold.
CLNE is a strong buy and way under-priced at just over $4, for a company leading the next revolution.
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