Whether you're a veteran investor, or simply tired of being jerked around by volatile oil prices , odds are by now you've heard the name T. Boone Pickens. He's the guy on television commercials encouraging the U.S. to break free of its dependence on oil by embracing alternative forms of energy .  No big deal, except for one thing ... folks are starting to listen . While we'd love nothing more than to see the world embrace the idea of being 'green', our more immediate interest is in making some money with this paradigm shift . 

As it just so happens, there's a fairly easy way to possibly do that. Literally, it's the T. Boone Pickens way . 

For those of you who know T. Boone Pickens' background, you'll appreciate the irony that he made most of his fortune as an oilman . Now he's going in the opposite direction. That's why his interest in alternative energy carries a little weight with me...it's not like he's just some guy off the street who doesn't understand the reality of the energy industry. 

Of course, what carries the most weight with me is his money , and what he's doing with it . 

Pickens is the founder and primary funder of Clean Energy Fuels Corp. (NASDAQ: CLNE) ...the stock pick we're suggesting today. He currently owns about 37% of the company, and has poured hundreds of millions of his own dollars into the corporation. So, owning some CLNE is indeed like investing side-by-side with a guy who (1) puts his money where his mouth is, and (2) has a better grasp of the industry than most of us ever could. 
 

Company Overview

Pickens has his hand in several under -developed and non-revenue-bearing clean energy projects, but Clean Energy Fuels isn't one of them. Clean Energy Fuels has a viable business model, real revenue, and a growing top line. 
 

In a nutshell, Clean Energy Fuels is a natural gas filling station . The way most people go to a gas pump and fill up their car with a tank of gas, Clean Energy's customers fill up their vehicles with natural gas (compressed and liquefied). Most of their customers are 'fleet' customers like taxis, public busses, and municipal vehicles. The majority of the stations are in the southwest or northeast.

Just because the stations aren't everywhere, don't assume natural gas isn't a big business yet . Clean Energy Fuels pulled in revenues of $117 million last year ...a 28% increase of 2006's top line, which was 16% better than 2005's total. 

CLNE's books are clean too. They've got $249 million in total assets, $83 million of which is cash. There's no long-term debt...just $16 million in near-term obligations. The point is, the company's not strapped, and can stick around for the long haul without needing to borrow anything.

And what about the bottom line? That may be the sweetest/stealthiest piece of the whole pie. 

The company was not profitable last fiscal year, which means it's off a lot of investors' radars right now. However, it's been inching closer and closer to profitability again. We expect a move back into the black next year, which could draw a lot of new investor interest. That's why you'd want in now - to let other investors pile in after you do so you can benefit from their clamoring. 

We've got more details on this potential move to profitability below.
 

The Specifics

In many ways, Pickens is to energy investing what Warren Buffett is to value investing. That's not a sales pitch - just a fair observation. With that in mind, I think it's also important to point out that Buffett's favorite ally is time ; Buffett knows it can take a while for a stock to become properly valued. 

So, we're viewing CLNE as a longer-term idea . A holding period of a year or more may be needed to really capture its full potential. That potential, however, is well above the average stock's potential for the same time frame. 

Nevertheless, since the market isn't always concerned with the calendar, we'll at least add a target price and stop for now. 

A stop of $8.83 looks like a good line in the sand - that was essentially where the stock found support a couple of weeks ago. As for a target, let's use $19.95, since it seems to be a significant resistance level. CLNE was actually there in September, essentially matching the high from October of last year. Hitting that target would mean almost a double from the current price of $10.99.

Our optimistic outlook isn't based strictly on an oversold chart though. At least eight analysts agree Clean Energy's rate of revenue and earnings progress is going to accelerate in 2009. The average top line estimate for fiscal (and calendar) 2009 is $211 million, with anticipated profits of 28 cents per share. At 28 cents per share, the forward-looking P/E is 39.3. The bigger the company gets, the lower the P/E goes.

You could make the argument that those estimates don't yet reflect the likelihood of a recession. However, we'd argue this particular enterprise isn't greatly affected by a recession. In fact, it may thrive in a tight economy. 

Won't cheap oil hurt natural gas demand? Doubtful. The pain of record-breaking oil prices has already inspired the move to alternatives, even though crude's been cut in half over the last few weeks. The natural gas era is now rolling along on its own. 

Between a technically-oversold chart, a bullish expectation when it comes to company fundamentals, and a growing degree of social support for the 'green' energy solution provided by Clean Energy Fuels ( from deep-pocketed T. Boone Pickens no less ), we simply see a lot of upside for CLNE at its current level.

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