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A Few Reasons to Invest in Clean Energy Fuels for the Long Run

August 05, 2014 | About:

Clean Energy Fuels (NASDAQ:CLNE) posted impressive quarterly results. The company met expectations and saw growth in its top line. Clean Energy saw an increase in its customer base, resulting in growth in gallons delivered that helped the company to outpace analysts' estimates.

Solid growth ahead

Clean Energy is well-positioned to tap a growing market and improve its bottom line. It has a huge customer base, and is filling around 35,000 vehicles daily. Moreover, many companies are adopting natural gas refuse trucks and buses. This will lead to further growth in its customer base.

With the introduction of the Cummins Westport 12 liter engine, it is expected that the heavy duty trucking industry will undergo a transition toward natural gas, which will give a lot of opportunity to Clean Energy to benefit from this transition. Though this market is in its infancy, the company is confident of an increase in demand. Trucking companies all over the country are placing orders ranging from a few test natural gas heavy-duty trucks to several hundred trucks.

Clean Energy had acquired IMW, which is believed to have one of the best CNG compressor technologies. This will allow it to deliver quality services to customers, resulting in more customer traction. With its cutting edge technology, Clean Energy is focusing on bringing new products to the market by innovating new products.

Increasing demand

Clean Energy is seeing strong demand for compressors. With the NGV penetration increasing, the company is seeing better demand globally. It is focusing on growth from potential markets such as China and Russia. Also, the company is seeing an increase in sales through IMW in countries such as Australia, Vietnam, Turkey, Israel and Mexico. So, the company is seeing growth opportunities on the international front as well. Clean Energy is pleased with IMW, as it saw 34% growth in sales. Further, in the future, Clean Energy is expecting to gain more traction through IMW.

Clean Energy is seeing strong growth in core markets of transit, refuse, airports, and fleet services. Moving to its transit business, Clean Energy is expecting strong traction. The Southern Nevada Regional Transit Commission of Las Vegas has added 125 CNG buses and 35 CNG para-transit vehicles last year, which is why volumes jumped by over 25% year-over-year to 2 million gallons a year.

Clean Energy is expanding and upgrading two stations to provide additional capacity to support its growing fleet. It is also building three stations to service the expanding fleet of the City of Los Angeles transit buses that are operated by MV Transportation and Veolia. With the completion of these, the company is expecting sales to grow.

Clean Energy’s refuse market is also seeing an improvement. The company was awarded a contract by the Lancaster County Solid Waste Authority in Pennsylvania to build and operate a station for their fleet, which is a great opportunity for Clean Energy to improve its performance. Also, there is opportunity in fleet services and airports, where Clean Energy has taken over operations in Boston, Logan, and Washington Reagan airports to fetch more.


Clean Energy also has an expansion strategy. It has entered into new markets such as Missouri, where it has already completed a partnership with Lee's Summit School District which recently deployed approximately 140 CNG school buses. Moving on, the company is also increasing its LNG customers such as UPS, Ryder, and Modern Transport. So, Clean Energy is well positioned with its strategies, and is seeing solid growth in sales. Driven by the growth in its customer base, the company can continue gaining solid traction, making it an interesting long-term buy.

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