Is It Time to Buy Clean Energy Fuels?

Last week, I contemplated the future of alternative fuels and some of the key players in the industry. Clean Energy Fuels (Nasdaq: CLNE  ) the promptly backed up one of my picks and provided some much needed profit to give this emerging sector some financial footing to stand on.

Higher prices helped Clean Energy Fuels swing to a fourth-quarter profit of $13.8 million, or $0.18 per share. But it's the addition of LNG stations at Pilot Flying J stations that should drive future growth and a wider adoption rate. With the acquisitions of Northstar, which designs stations and fueling system technologies, and IMW, which is a leading global supplier of equipment for vehicle fueling, the company is in good position to continue ramping up sales.

Alternative fuel makers like Fuel Systems Solutions (Nasdaq: FSYS  ) and Rentech (AMEX: RTK  ) should also be happy to see progress at Clean Energy Fuels. Their alternative fuels don't stand a chance if we can't build a feasible infrastructure for natural gas, which is a far more abundant fuel source. But if that natural gas infrastructure is successful, as Clean Energy Fuels is showing, we may be able to offer more exotic alternatives.

Imagine a fueling station that offers traditional gasoline, natural gas, synthetic fuel, and maybe a place to charge your plug-in hybrid. While you're having lunch on a family road trip, your car is filled with fuel and topped off with electricity just in time to hit the road.

On the financial front, Clean Energy Fuels' balance sheet is pretty clean with only $9.8 million in long-term debt and $67.1 million in cash on hand. But the stock currently trades at 4.2 times 2010 sales, and while revenue may have increased 97% from last year, gasoline gallon equivalents only increased 7.5%. I would like to see that number increasing more rapidly before jumping into this stock with both feet.

Clean Energy Fuels is taking great steps in the right direction, but the stock is a little too expensive for me today. But if oil prices keep rising, this Fool may start singing a different tune.

Interested in reading more about Clean Energy Fuels? Click here to add it to My Watchlist, which will find all of our Foolish analysis on this stock.

More on Tomorrow's Fuel:

Fool contributor Travis Hoium has not upgraded to a natural gas powered hotrod, but he is on the lookout. He also does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.

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