Shares of Clean Energy Fuels (NASDAQ: CLNE), which sells natural gas as a vehicle fuel, rose an astounding 39% in March, according to data provided by S&P Global Market Intelligence. Basically all of that huge advance came after the company's March 12 earnings release. It would be something of an understatement to suggest that investors were pleased by the company's 2018 financial results.
There was a lot to like about Clean Energy's performance last year. For example, the company proudly noted that its operating performance in 2018 was the best in five years. The numbers bear that out, with a 4% increase in natural gas volumes sold in 2018. The fourth quarter showed particular strength, with a 14% year-over-year advance.
And the future looks bright, as Clean Energy is set to grow the distribution of its fuels via an expanding partnership with energy giant BP. It's also continuing to leverage its relationship with Total SA, its largest shareholder, to help potential customers finance the shift to trucks fueled by natural gas.
There was also good news on the balance sheet, which a few years ago was a major weak spot for the tiny company. At this point, it has more cash and short-term investments than long-term debt. In other words, it has a good foundation and its growth prospects look appealing. Although Clean Energy isn't projecting 2019 to be a breakout year (adjusted EBITDA is expected to fall), the overall outlook for the company is much improved, driven by improving volumes.
It's little wonder that investors responded favorably to the earnings release and pushed the shares sharply higher.
It's exciting to see a stock rocket in value, like the nearly 40% advance at Clean Energy Fuels. But one month and one earnings release shouldn't be all you base your investment decision on. Clean Energy is pushing natural gas as a fuel at the very same time that other companies are pushing electricity as the better option.
Since it's a tiny competitor, investors should think carefully about the long-term future of natural gas versus other options (including oil) before jumping aboard Clean Energy Fuels. That remains true even though the company's outlook appears to be brightening.
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