Published:
September 8, 2008
Natural gas is a common fuel for power
plants and residential heating appliances, but historically very
little has been used as a fuel for vehicles and public
transportation.
But that's changing. Natural gas costs far less than oil for the
same amount of energy, and it's far better for the environment --
several major population centers, including Washington, D.C. and
parts of California, are now using buses, airport shuttles,
garbage trucks and even taxis fueled using natural gas. Some,
including oil billionaire T. Boone Pickens, would like to make
natural gas an even more widely used transportation fuel --
Pickens has suggested that natural gas could one day transplant
gasoline as
the primary fuel for cars in the U.S.
Clean Energy Fuels
(Nasdaq: CLNE, $19.04) attempts to address this need. The company builds the
infrastructure needed to fuel natural gas vehicles, such as
service stations. The company has already built stations for
some of the largest airports in the country, such as Los Angeles
(LAX) and Dallas/Fort Worth (DFW). In total, the company owns
and operates over 170 natural gas fueling stations.
Currently, the bulk of CLNE's stations are targeted at fleet
customers like taxis and bus firms. But some automobile
manufacturers are making passenger cars designed to run on
natural gas. While the market for personal natural gas vehicles
is still in the early stages, this could be an even larger potential growth driver for CLNE in the coming years.
Clean Energy Fuels is still a young company that's just turning
the corner to profitability. In its 2009 fiscal year, CLNE is expected to earn
its first annual profit; longer-term, growth is expected to
approach +28% annualized. These expectations are based on CLNE's
continued ability to convince more fleet customers to covert to
natural gas.
T. Boone Pickens is a major shareholder and one of the
founders of Clean Energy Fuels. He recently spent nearly $60
million on national TV advertising promoting natural gas as a
transportation fuel. This is sure to raise the profile of CLNE.
Clean
Energy Fuels
is a relatively new company with a limited trading history. To
date, the firm has operated in the red thanks to the heavy
up-front spending required to build out infrastructure. But
high oil prices coupled with more stringent environmental
regulations are prompting many fleets to consider switching to
natural gas. CLNE looks like a "Buy" candidate for aggressive
investors on a pullback to under $15 per share.
Paul Tracy
Editor
StreetAuthority
Market Advisor
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Paul Tracy co-founded StreetAuthority.com and became the firm's
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for equity research and managing a team of seasoned professional financial
writers, researchers and market commentators.
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full-service brokerage operations as well as economic research work on a Money
and Banking project funded by the National Bureau of Economic Research. He has
also spent time doing outside consulting and research for the University of
Virginia, has appeared as a guest expert on several prominent financial radio
shows, and has been a featured speaker at various investment conferences across
the U.S.
Paul graduated with a B.S. in Finance and Management from the McIntire School
of Commerce at the University of Virginia.
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