Why Clean Energy Fuels Has Been a Big Mover in 2012

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The first half of 2012 is in the rearview mirror, and investors are gearing up for what looks to be an action-packed ending. There are bound to be some big winners -- and more than a few duds -- no matter what happens in the United States and abroad.

Will your favorite stock have its victory lap as we hit the home stretch, or will it get lapped? First-half performances can hold some clues, so let's look to the recent past to find out whether Clean Energy Fuels (NAS: CLNE) deserves a place in your portfolio going forward.

First-half recap
Clean Energy has been one of 2012's more volatile stocks, as you can see here:


CLNE Total Return Price Chart

CLNE Total Return Price data by YCharts

Despite the stock's yo-yo movements, shareholders are still sitting on a comfortable gain for the year to date. Here are a few financial snapshots of its recent performance:

Market Cap$1.3 billion
Trailing-12-Month Revenue$301 million
TTM Net Loss($70 million)
TTM Free Cash Flow($150 million)
Most Recent Quarterly Revenue$74 million
MRQ Net Loss($32 million)
MRQ Free Cash Flow($54 million)
MRQ Revenue / Net Income YOY Change13.8% / (220%)
P/E and Forward P/ENM / NM
Price to Free Cash FlowNM
Motley Fool CAPS Rating (out of 5)**** ( find out more by clicking here )

Source: Morningstar. NM = not material due to negative results.

What the numbers don't tell you
Many secondary nat-gas stocks, including Clean Energy's engine-conversion peer (and sometime rival) Westport Innovations (NAS: WPRT) , have yet to fully recover from the rejection of a key legislative amendment this March. That defeat resulted in a long slide for both companies, which remain unprofitable despite steadily growing revenues:

CLNE Net Income TTM Chart

CLNE Net Income TTM data by YCharts

But just as these two nat-gas hopefuls can overreact to bad news, they can also overreact to good news. Late-spring reports of Westport's partnership with Volvo, on the heels of a firm relationship with Ford (NYS: F) to provide engines for heavy-duty F-series trucks, began a rebound that's continued to this day. Oklahoma's statewide rebate initiative for nat-gas vehicles, begun less than a month ago, also gave both companies a big bounce.

The price of United States Natural Gas (AMEX: UNG) remains near all-time lows, which should be a boon for nat-gas converters and would-be suppliers. It may not last. Chesapeake Energy (NYS: CHK) , with which Clean Energy's partnered to roll out its Natural Gas Highway, is frantically shifting its drilling focus toward more profitable liquids to counter dips in both top and bottom lines. After massive growth in operating nat-gas rigs through much of the past decade, the number of active rigs in the United States has now declined to its lowest point since 1999. That's bound to lead to an eventual rise in the cost of natural gas, eroding Clean Energy's competitive benefit.

I and my fellow Fools Travis Hoium and Sean Williams debated Clean Energy's merits earlier this year and found its business model lacking. Fool contributor Jeremy Bowman agreed with our bearish assessment last month, pointing out that the economics of nat-gas transportation and Clean Energy's capital-intensive expansion needs don't seem to justify investor optimism.

Clean Energy's next earnings report, scheduled for early August, should provide a clearer picture of its second-half potential. How long will Clean Energy's rebound continue? It's hard to say. However, there's no indication that investors will be rewarded with profitable results any time soon.

In some cases, it's better to invest in the sure thing rather than in a great gassy hope. There's one company that fits the bill, and it's the only energy stock you'll ever need. To find out what makes this hidden gem the best energy stock for your portfolio, click here for The Motley Fool's exclusive free report.

At the time this article was published Fool contributor Alex Planes holds no financial position in any company mentioned here. Add him on Google+ or follow him on Twitter @TMFBiggles for more news and insights.The Motley Fool owns shares of Chesapeake Energy, Westport Innovations, and Ford Motor. Motley Fool newsletter services have recommended buying shares of Chesapeake Energy, Clean Energy Fuels, Ford Motor, and Westport Innovations. Motley Fool newsletter services have recommended creating a synthetic long position in Ford Motor. The Motley Fool has a disclosure policy.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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