New Trade for July 6th, 2023

Stocks stumbled this morning after better-than-expected jobs data added to concerns about the state of the economy. According to data from ADP, private sector jobs increased by 497,000 in June, eclipsing the Dow Jones consensus estimate of 220,000 jobs gained.  

Today we’re highlighting a small-cap company with business expansion and margin improvements on deck for the year’s second half. Wall Street foresees an average 50% upside in the coming months for this tiny company’s stock, which currently trades for less than $5 a share.  

Clean Energy Fuels (CLNE)

Natural gas is turning out to be one of the more popular petroleum fuels in the world right now. In fact, data from the Energy Information Administration (EIA) shows that natural gas was the second most widely used fuel in the U.S., accounting for 32% of the energy consumption in 2021, thanks to rapid adoption within the electricity sector.

Natural gas distributor, Clean Energy Fuels, is expanding its business beyond conventional natural gas in 2023. The company is diversifying its historical status as purely a fuel distributor towards in-house renewable natural gas (RNG) production. 

“Margin improvement is on deck heading into the second half,” Raymond James analyst Pavel Molchanov said. “For 2024, we estimate EBITDA approximately tripling, this being the first year with a meaningful contribution from in-house RNG production,” he continued.

CLNE share price gained nearly 26% in June and seems likely to have more runway ahead. The stock is down 5% year to date. The current consensus among 11 polled investment analysts is to Buy CLNE. A median 12-month price target of $7 represents a 50% increase.  

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