Clean Energy Fuels: A Buy for the Long Run

Clean Energy Fuels (CLNE) looks like an investment for the long haul. This is because the company is plying its business in a market that’s invested to grow at an impressive pace over the long run. Let’s take a look at the reasons why it is a good idea to buy Clean Energy for the long run.

Impressive moves

Clean Energy is strategically making investment in the construction of the projects, right sizing its business model, and enhancing its product portfolio. Also, the improvement in natural gas prices and a significant investment in liquefied natural gas vehicles across the industry portray a positive picture for Clean Energy Fuels.
All of these should act as a tailwind for Clean Energy going forward and improve its top and bottom line performance.

For example, the company had invested nearly $9.1 million in the construction projects during the first quarter of 2015. These projects have been successfully completed that should start delivering output from the second quarter onward. This should help the company to make up for the loss and gradually amplify its revenue.

For example, Rush Enterprises, one of the largest dealership chains in the United States, announced a new venture to manufacture, sell, and service new light weight compressed natural gas fuel systems for class VI through VIII trucks. In addition, Cummins Engine Company and Agility Fuel Systems also announced a strategic partnership to make hardware and software tech natural gas engine and agility fuel tanks.

These investments in the liquefied natural gas will certainly keep the momentum going for Clean Energy Fuels in the future. Moreover, the company is strategically building relationships with its clients across the country to fuel light duty and heavy duty LNG trucks, buses, and passenger cars.

A growing end market

Additionally its renewable fuels division is picking up the speed with the growth of environment-friendly businesses across the world. Its Redeem branded renewable natural gas fuel is gaining lots of popularity. For example, UPS, the largest logistics company in the United States, has signed a long-term agreement to purchase its Redeem branded renewable natural gas fuel at their three big stations in Sacramento, Fresno and Los Angeles.

Clean Energy Fuels expects these stations to provide about 1.5 million gallons of renewable natural gas fuels annually to approximately 400 CNG vehicles that UPS has deployed in California. In fact, UPS has recently increased its LNG and CNG orders. The company will be purchasing more than 800 tractors and 600 delivery vans of LNG and CNG this year. UPS hasn’t purchased a diesel truck in the last two years. Hence, this trend suggests that the prospects for natural gas are bright that should support Clean Energy in the future.

Furthermore, the company is busy rightsizing its business model and making significant investments in product enhancements that should add value to its overall growth in the future. It has recently standardized its compressor designs that will make its manufacturing process more efficient and decrease its time to ship.

Conclusion

Clean Energy Fuels looks well-placed for gains in the long run. Analysts expect its earnings to grow at a strong rate in the long run, which will lead to a better performance on the stock market. So, I think that Clean Energy is an investment that should not be missed.

 
Published on Oct 28, 2015
By Yaggyaseni Mittra

Copyrighted 2016. Content published with author's permission.

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