Clean Energy Fuels: Buy, Sell, and Hold?
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Clean Energy Fuels (CLNE) is down nearly 50% since early February. Should investors buy the dip? Or is it the start of a bear market for the stock? Patrick Ryan breaks it down below.
Clean Energy Fuels (CLNE) has climbed higher across the first four months of the year. Clean energy stocks have been strong due to improving economics and the Biden administration's plans to increase investment. CLNE is leading the charge for energy change, providing companies such as Amazon (AMZN) with renewable natural gas.
The company provides natural gas used for transportation purposes in North America. Aside from Amazon, examples of CLNE customers include ports, trucking businesses, airports, shuttle services, taxi services, and refuse-oriented companies. CLNE operations are in both the United States and Canada.
How high can CLNE go? Will the stock level off after profit-taking occurs in the days and weeks ahead? Or will CLNE continue to climb? Let’s take a deep dive into CLNE in an attempt to predict where the stock will go from here.
CLNE has a shockingly high forward P/E ratio of 278.50. This elevated forward P/E ratio is particularly concerning because CLNE is trading about $10.50 below its 52-week high of $19.79. The stock's 52-week low is a mere $1.69. Though egregiously high forward P/E ratios are quite common for tech stocks, they are less common for companies that provide natural gas, including that of the renewable variety.
Rewind to November of 2020 and CLNE was trading at $2.70. The stock gradually inched upwards, rising to $5 by late November. CLNE continued to climb higher in the weeks to follow, popping to $8.20 in mid-December. CLNE broke through the $11 barrier in early January. The stock traded sideways until early February of 2021 when it shot up all the way to $18.64. However, CLNE has dipped since reaching $18 and change, sliding down to $10.71 by early March. The stock is now trading at $9.35.
CLNE has signed an agreement with Amazon to provide the e-commerce powerhouse with clean energy fuel. This renewable natural gas will help preserve the planet while minimizing Amazon's strain on our finite fossil fuel resources. Both low-carbon and negative-carbon renewable natural gas will be delivered by CLNE to more than two dozen Amazon fueling stations. An additional 19 such fueling stations will be up and operating by the end of the year, fortifying CLNE's relationship with this industry titan all the more. In total, CLNE renewable energy will be provided to Amazon stations located throughout 15 states.
If everything goes as planned, Amazon will have net-zero carbon emissions within two decades or less. Part of CLNE's recent ascension is the result of an equity investment stemming from Amazon. However, CLNE reported revenue of a mere $75 million in the fourth quarter of '20. Furthermore, CLNE fuel deliveries dropped by 7% compared to the same quarter in the prior year.
The Analysts’ Take on CLNE
The analysts are quite bullish on CLNE, setting an average target price of $19.40 for the stock. If CLNE rises to this level, it will have popped by 74.46%. The analysts' highest target price for CLNE is $27 while the lowest target price is $11. Of the five analysts who have issued recommendations for the stock, three consider it a Buy, two consider it a Hold and none consider it a Strong Buy, Sell, or Strong Sell.
CLNE POWR Ratings
CLNE has a D grade in the POWR Ratings meaning it is a Sell. The stock has D grades in the Value, Growth, and Stability components of the POWR Ratings along with an F grade in the Sentiment component. Investors who are curious as to how CLNE fares in the rest of the POWR Ratings components such as Momentum and Quality can find out by clicking here.
Of the 50 publicly traded companies in the Energy - Services space, CLNE is ranked 40th. The Energy - Services sector as a whole has an F grade. Investors who want to learn more about the stocks in the Energy - Services sector can do so by clicking here.
Is There Upside Left?
Unfortunately, it appears as though CLNE should be avoided for now. Alternative energy stocks had a remarkable run over the last year. Valuations have gotten ahead of themselves, and it seems that tax season could be the catalyst for profit-taking. Continue checking in with the POWR Ratings to find out when it's a buy.
CLNE shares were trading at $10.28 per share on Friday morning, up $0.20 (+1.98%). Year-to-date, CLNE has gained 30.79%, versus a 10.88% rise in the benchmark S&P 500 index during the same period.
About the Author: Patrick Ryan
Patrick Ryan has more than a dozen years of investing experience with a focus on information technology, consumer and entertainment sectors. In addition to working for StockNews, Patrick has also written for Wealth Authority and Fallon Wealth Management.Clean Energy Fuels: Buy, Sell, and Hold? appeared first on StockNews.com