A Huge Opportunity In Natural Gas Fueling Infrastructure!

| November 23, 2012 | 0 Comments

After enduring a hefty 8-month slide, Clean Energy Fuels (CLNE) is back on investors’ radar.  In fact, CLNE has surged nearly 20% over the past few days thanks to a promising development.

Take a look…

Clean Energy Fuels

What’s going on?

The company announced a $200 million financing agreement with General Electric (GE) on November 13th.  The deal will put GE’s MicroLNG plants at CLNE’s quickly growing portfolio of natural gas fueling stations.

If you haven’t heard of CLNE, let me give you a quick company recap…

Company founder and legendary Texas oilman, T. Boone Pickens, has long been a proponent of using natural gas to fuel the US trucking industry.

As a result, Pickens’ company is leading the way towards making natural gas fuel a reality for long-haul truckers.  In fact, the company’s close to its goal of completing 70 natural gas fueling stations by the end of this year.

What’s more, by the end of 2013 the company plans on completing the first phase of its nationwide natural gas fueling station roll out.  At that point, CLNE will have 150 locations across the US… a major company milestone.

Now, long-time readers know I’ve covered CLNE in the past… 

In February 2012, I suggested the company had plenty of long-term investment potential. However, at the time I also believed shares were extremely overbought due to the bullish speculation surrounding the NAT GAS Act that was passing through Congress.

Maybe you remember, under the NAT GAS Act, trucking companies would have received hefty federal tax credits to implement natural gas fired engines.  The goal of the bill was to get America’s trucking industry running on homegrown fuel instead of sending billions of dollars to overseas oil producers.

However, heavy opposition from fertilizer and chemical industries was a death knell for the revolutionary Act.  After all, fertilizer and chemical companies are experiencing a profit boom thanks to cheap natural gas, and they want it to stay that way.

The unwelcome decision sent CLNE into the gutter…

Clean Energy Fuels

No doubt about it, CLNE’s fall from grace has been swift over the past eight months.  But as nasty as this chart looks, don’t let it fool you.  The long-term investment potential for CLNE is still firmly intact.

You see, the economics behind natural gas fired engines make undeniable sense… 

Fleet operators can reduce fuel costs 25% by adopting natural gas fired engines. And even though natural gas powered trucks cost $30,000- $40,000 more than a traditional counterpart, fuel savings cover the additional costs within two years.

The economics of natural gas engines are so good that Waste Management (WM) says 80% of the trucks it purchases over the next five years will be fueled by natural gas.

What’s more, major engine and truck manufacturers are quickly jumping on board.  Navistar (NAV), Cummins (CMI), Freightliner, Volvo- they’re all ready to supply truckers with natural gas power.

Of course, one of the last major hurdles holding back widespread adoption of natural gas transportation is the lack of fueling infrastructure.

But as you can see, that problem is something CLNE is quickly solving!

Is CLNE right for your portfolio?

For the patient investor, CLNE still offers enormous potential.  In the not-so-distant future, this company will likely be a leader in a multi-billion dollar industry.

However, CLNE does have its near-term risks…

The company is still showing plenty of red ink on the bottom line.  As a matter of fact, Q3 2012 losses surpassed $16 million.  So it’s not out of the question to see shares retreat in coming months should losses steepen.

However, if you’re a patient investor who believes in the future of America’s natural gas highway as I do, you’ll be buying shares at these depressed levels.

Until Next Time,

Justin Bennett

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Category: Commodities, Stocks

About the Author ()

Justin Bennett is the editor of Commodity ETF Alert, an investment advisory focused on profiting from the ebb and flow of important commodities via ETFs. The commodity veteran and options specialist is also a regular contributor to the Dynamic Wealth Report. Every week, Justin shares his thoughts with our readers on a variety of commodity-related topics. Justin is also a frequent contributor to Commodity Trading Research’s free daily e-letter. And he’s the editor of another highly successful and popular investment advisory, the Options Profit Pipeline.

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