Investors interested in natural gas and liquefied natural gas (LNG) can take a look at the following two companies: Clean Energy Fuels Corp (CLNE) and Cheniere Energy, Inc. (LNG). Although neither company is profitable yet, CLNE offers strong growth while LNG has the only license to export LNG. Both companies will be reviewed fundamentally and technically. Investing strategies will also be presented.
Clean Energy Fuels Corp
CLNE was down 0.14% and closed at $13.91 on March 20, 2013. CLNE had been trading in the range of $10.90-$24.75 in the past 52 weeks. CLNE has a market cap of $1.23B with a high beta of 2.09.
On March 11, 2013, Ascendiant Capital initiated coverage on CLNE with a buy rating and a price target of $15.50. Analysts currently have a mean target price of $16.23 and a median target price of $15.50, suggesting 11.43%-16.68% upside potential. Analysts, on average, are estimating an EPS of -$0.06 EPS with revenue of $100.06M for the current quarter ending in March, 2013. Analysts are projecting an EPS of -$0.54 with revenue of $394.74M for 2013, which is 18.20% higher than 2012. Analysts are also predicting revenue of $509.65M for 2014, which is 29.10% higher than 2013.
With more stations in development, Clean Energy has already completed 70 natural gas fueling stations as part of America's Natural Gas Highway®, which will allow long-haul trucks to travel across all major corridors through the United States. On March 19, 2013, CLNE and Westport Innovations Inc. (WPRT) launched a new joint marketing program to encourage the use of natural gas vehicles and the establishment of the growing fueling infrastructure across North America. The program is targeted to deliver an attractive payback for truck customers utilizing the Cummins Westport ISL G or ISX12 G engine with a Westport LNG Tank System and to establish availability of long-term refueling contracts at savings to diesel for Clean Energy customers. Another goal is to establish a strong market for natural gas trucks with additional conveniently located liquefied natural gas (LNG) fueling stations for customers.
Fundamentally, CLNE is still operating without profit; however, CLNE had achieved higher revenue growth of 36.4 (3 year average), as compared to the industry average of 10.9. With expected 23.00% long-term annual EPS growth for the next 5 years, CLNE has much more upside potential.
Technically, the MACD (12, 26, 9) indicator is showing a bullish trend, but the MACD difference continues to converge. The momentum indicator, RSI (14), is declining but still indicating a bullish lean at 58.53. CLNE is currently trading above its 200-day MA of $13.39 and 50-day MA of $13.22, as seen from the chart below.
How to Invest
CLNE is a good bet for increasing demand for natural gas as an alternative fuel for vehicle. By working with Westport Innovations and utilizing Cummins's (CMI) engines, the future looks promising. For bullish investors, a credit put option spread of June 22, 2013 $11/$13 put can be reviewed.
Cheniere Energy, Inc.
LNG was up 1.93% and closed at $25.32 in the past 52 weeks. LNG had been trading in the range of $10.51-$25.45 in the past 52 weeks. LNG has a market cap of $6.12B with a beta of 0.91.
On February 21, Barclays upgraded LNG from equal weight to overweight and increased the price target from $17 to $25. Analysts currently have a mean target price of $26.40 and a median target price of $25.00. Analysts, on average, are estimating an EPS of -$0.29 with revenue of $71.90M for the current quarter. For 2013, analysts are projecting an EPS of -$1.57 with revenue of $276.81M, which is 4% higher than 2012.
Fundamentally, similar to CLNE, LNG does not generate profit yet and achieved the revenue growth of 13.7 (3 year average), which is higher than the industry average of 10.9. For the recent development of Cheniere Energy, investors can read this insightful article, written by Peter Pham from Seeking Alpha, "Cheniere's Train Is Fully Gassed Up".
Technically, the MACD (12, 26, 9) indicator is showing a bullish trend. RSI (14) is indicating a strong buying momentum at 76.22, where above 70 is considered as overbought. LNG is currently trading above its 200-day MA of $16.90 and 50-day MA of $21.71, a seen from the chart below.
How to Invest
Since my last article of "3 Stocks With More Upside Potential For 2013," LNG had gained 21.56% in less than 2 months as of March 20, 2013. LNG continues to be technically bullish and there maybe more upside potential in the near time. However, despite the fact that Cheniere Energy is the only LNG export company so far to receive a permit from federal regulators and the short-term bullish trends, investors have to invest with caution after the recent run-up. For long-term investors, a safer entry point will be $21/$21.50 price range. Investors can also review the following ETF to gain exposure to LNG:
- U.S. Small-Cap ETF (SCHA), 0.27% weighting
Note: All prices are quoted from the closing of March 20, 2013. Investors and traders are recommended to do their own due diligence and research before making any trading/investing decisions.