A Natural Gas Stock That Could Clean Up

Compressed natural gas is an exceptionally efficient fuel for return-to-base fleets, as analysts believe it produces 50% to 70% fewer pollutants and saves $5,000 to $20,000 in fuel costs annually per vehicle than diesel, the fuel most commonly used today.

There's just one company focused on this market, and it went public a month ago, Clean Energy Fuels (CLNE Quote - Cramer on CLNE - Stock Picks) of Seal Beach, Calif.

Founded 10 years ago by energy industry icon T. Boone Pickens, the company designs, builds, finances and operates fueling stations that supply CNG and LNG to fleet operators. It also helps customers buy and finance natural-gas vehicles and ensure that they get their full measure of government incentives for doing so. Through 168 stations, it already serves 200 fleets that operate 13,000 CNG vehicles.

The company makes money mostly by selling CNG and LNG and running fueling stations. It's a volume business, and Clean Energy aims to become the brand and sales leader. The plan is attractive in its simplicity. By leveraging the country's vast network of gas pipelines, Clean Energy just buys supercooled liquefied natural gas from local utilities and then compresses and transports it to its fueling stations via tanker trucks.

Last year, Clean Energy lost $4.7 million on $91.5 million in revenue, but it appears to be right on the verge of a material ramp in profitability. It did earn money in the first quarter of this year, and if it wins a couple of contracts that are currently on the table with Waste Management (WMI Quote - Cramer on WMI - Stock Picks) and the Port of Los Angeles, it could earn as much as 3 cents a share in the current fiscal year, 23 cents in 2008 and 60 cents to 84 cents in 2009.

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