A Natural Gas Stock That Could Clean Up

Natural-gas vehicles are rare in private use here but much more common overseas. The International Association for Natural Gas Vehicles estimates that there are nearly 6 million NGVs worldwide, but only 150,000 or so are in the U.S. International popularity for the vehicles has been cultivated through a combination of clean-air mandates, high gasoline prices and large supplies of natural gas.

It's not hard to imagine, with a spate of clean air initiatives being proposed by individual states, along with calls for energy independence, that NGVs will gain popularity.

Moving forward, the big catalyst for Clean Energy will be the Port of Los Angeles' push to replace 5,300 of its oldest diesel trucks with ones powered by natural gas over the next two years.

Clean Energy has already won three out of the four contracts that the port has awarded for LNG terminals, and it is considered likely to win the fourth as well. The deal would boost annual gas volume by 32% in 2008 alone.

Other West Coast ports are said to be considering similar initiatives to help them comply with state regulations aimed at reducing carbon-dioxide pollution by 10% over the next 10 years.

When you add it all up, CNG looks like a promising transportation fuel for the next decade, and Clean Energy is emerging as its leading brand. My target for next year is $20, which would be a 40% move from the current quote.

But don't go wild with this stock or any others in this emerging field, and use a protective stop in case its promise doesn't materialize. Many new companies have tried to break the major oil companies' hold on transportation fuel, and most litter the roadside with failure.

Fine Print

Clean Energy buys gas from its own plant in Texas, Williams (WMB Quote - Cramer on WMB - Stock Picks) and Exxon Mobil (XOM Quote - Cramer on XOM - Stock Picks). The new California plant's supplier will be Royal Dutch Shell (RDS.A Quote - Cramer on RDS.A - Stock Picks), BP (BP Quote - Cramer on BP - Stock Picks) or Sempra Energy (SRE Quote - Cramer on SRE - Stock Picks).

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