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Clean Energy: Catalysts for Renewable Fuel
09/17/2020 5:00 am EST
Clean Energy Fuels (CLNE) provides natural gas as an alternative fuel for vehicle fleets, helping reduce the amount of climate-harming greenhouse gas emissions, asserts Faris Sleem, a low-priced stock specialist and editor of The Bowser Report.
The company supplies renewable natural gas (RNG), compressed natural gas (CNG) and liquified natural gas (LNG) for light, medium and heavy-duty vehicles.
Additionally, it builds and operates 550 natural gas fueling stations in the United States and Canada. As of the end of Fiscal 2019, the company served approximately 1,000 fleet customers operating around 48,000 natural gas vehicles.
Quarterly sales decreased due to the global pandemic. The slowdown in activity was primarily in airports, public transit and government fleet customer markets. However, we are still confident in the company’s ability to turn a profit and maintain a competitive advantage.
Clean Energy has maintained its competitive advantage by lowering emissions and costs for customers. It is also the only company in the industry to offer CNG, LNG and RNG fueling.
A near zero natural gas truck is certified to produce emissions of less than one-third of an electric truck. This alone gives CLNE a massive competitive edge because it is currently a leader in the natural gas market.
In 2018, leading energy company, Total SA (TOT), agreed to purchase 50.8 million shares of CLNE common stock for $83.4 million to become the largest shareholder with a 25% stake. This resulted in the launch of Zero Now – the company’s truck financing program to expand natural gas into the large heavy-duty trucking market.
More recently, Clean Energy and Chevron (CVX) announced an initiative to supply trucks that serve the California ports of Long Beach and Los Angeles. And, these are just a couple of examples that show the opportunity for CLNE across North America.
The biggest catalyst down the road is that more companies are moving towards sustainability. The company currently has 550 fueling stations around the country and is adding more on a regular basis.
Moving forward, a change in management or management compensation would likely benefit shareholders immensely. An activist investor or perhaps a more active role from stakeholder Total SA could also have similar benefits.
Clean Energy's profitability and recent undervaluation have put it back within buying range. In addition to its growth potential, the stock is undervalued with a very healthy balance sheet. The company has a book value of $2.59 per share and is trading just below that level.
The world is shifting towards sustainability, and Clean Energy is in a great position to capture more market share with roughly 60% of the natural gas waste-collection truck market already.
In addition to its growth potential, the stock is undervalued with a very healthy balance sheet. Although COVID-19 has temporarily slowed growth, this could provide investors with a better long-term entry point on a pullback.
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