Clean Energy Fuels Stock a Way to Play the Move Toward Carbon Neutrality

Clean Energy Fuels Corp Provides Solutions to Energy Crunch

China and parts of Europe are currently facing severe shortages of energy that threaten to disrupt the economic renewal. But with the global push for green energy and carbon neutrality, simply burning more oil or coal isn’t the answer.

While solar and wind power come to mind, another viable green energy option is alternative fuels. This is where Clean Energy Fuels Corp (NASDAQ:CLNE) can help. The company produces clean, renewable natural gas for the transportation sector.

In May 2020, CLNE stock traded at $1.82. After Joe Biden won the presidential election in November 2020, Clean Energy Fuels stock initially surged.

But despite its potential to ride the green energy wave, CLNE stock has performed horribly this year, declining from $19.79 in February 2021 to about $9.00 now.

Advertisement

Driving the decline was selling from a major Clean Energy Fuels Corp insider in June. Generally, I would avoid a stock that has experienced that situation, but in my view, the deep selling and high prospects for green energy provide some optimism.

Clean Energy Fuels stock is holding its 50-day moving average, but is below its 200-day moving average.

That’s not encouraging, but CLNE stock has been attracting some oversold buying. A reversal in the sentiment could drive Clean Energy Fuels stock toward the $12.00–$15.00 range.

Chart courtesy of StockCharts.com

Improving Fundamentals Support Bull Case for CLNE Stock

An initial glance at Clean Energy Fuels Corp’s five-year revenue picture may make you want to stop reading now, but let me explain.

It’s true that the company’s revenues have been lackluster, but there are reasons to be optimistic. The economy is growing, and this will drive up the demand for energy, including green energy.

After an expected revenue drop to $265.7 million this year, Clean Energy Fuels is expected to lift its revenues to $364.9 million in 2022. (Source: Clean Energy Fuels Corp. (CLNE).” Yahoo! Finance, last accessed October 29, 2021.)

Fiscal YearRevenue (Millions)Growth
2016$402.7N/A
2017$341.6-15.2%
2018$346.41.4%
2019$350.71.2%
2020$289.6-17.4%

(Source: “Clean Energy Fuels Corp.” MarketWatch, last accessed October 29, 2021.)

The company delivered earnings before interest, taxes, depreciation, and amortization (EBITDA) income in the last three years. Its EBITDA fell in 2020, but it shouldn’t be a surprise.

Fiscal YearEBITDA (Millions)Growth
2016$41.6N/A
2017-$9.9-123.8%
2018$59.9705.9%
2019$68.312.9%
2020$38.4-43.8%

(Source: MarketWatch, op. cit.)

Clean Energy Fuels Corp has been inconsistent in terms of its generally accepted accounting principles (GAAP) earnings.

But the situation appears to be improving. Look for the company to turn a GAAP diluted earnings-per-share (EPS) profit of $0.03 in 2021 and 2022. (SourceYahoo! Finance, op. cit.)

Fiscal YearGAAP Diluted EPSGrowth
2016-$0.10N/A
2017-$0.53-430.0%
2018-$0.0296.0%
2019$0.10571.9%
2020-$0.05-149.7%

(Source: MarketWatch, op. cit.)

Clean Energy Fuels Corp produced a five-year free-cash-flow high of $50.9 million in 2020. That’s impressive and offers hope.

Fiscal YearFree Cash Flow (Millions)Growth
2016$22.4N/A
2017-$41.7-286.1%
2018$12.7130.5%
2019-$11.9-186.7%
2020$50.9561.8%

(Source: MarketWatch, op. cit.)

The company’s balance sheet is relatively solid, with good working capital, debt of $76.5 million, and healthy cash of $254.3 million. (SourceYahoo! Finance, op. cit.)

Analyst Take

Institutional investors have been picking up the pace of their buying of Clean Energy Fuels stock. About 295 institutions hold a 40.3% stake in the outstanding shares of CLNE stock. (SourceYahoo! Finance, op. cit.)

In my view, Clean Energy Fuels Corp has strong tailwinds to power ahead in the green energy sector; it’s just a matter of execution.