The Stock Advisors' Nathan Slaughter has released his newest addition to his "Top Growth Picks" portfolio. His choice: Clean Energy Fuels
Why? Let's explore...
Natural gas is a cheaper fuel than oil and diesel fuels. It also burns cleaner than oil. According to Natural Gas Vehicles for America (NGVA) over 98% of the natural gas consumed in the America comes from North America (nearly all from USA, the remainder from Canada).
Furthermore, as far as quantity (and irrelevant of environmental concerns) the US has an impressive amount of natural gas resources. "The Potential Gas Committee estimates that the U.S. has a future supply of more than 100 years."
Cheap, plentiful, and local? Go on...
Enter the increasingly popular natural gas vehicle (NGV). To date, there are over 13 million worldwide. In December of 2010 the United States ranked 14th for ownership with 112,000 NGVs. Pakistan ranks No. 1 with 2.74 million NGVs. Total production has grown exponentially from 1991 to 2010, and are expected to continue accordingly.
However the vehicles have never been very travel friendly-natural gas refills are much harder to come by than the traditional oil pump. With uncertainty of where its next refill will come from, NVRs have generally been limited to local purposes such as taxis, delivery trucks, and municipal service vehicles.
This hurdle is about to be addressed.
Clean Energy Fuels has been the happy recipient of $150 Million dollars, courtesy of Chesapeake Energy, for the purpose of "the development of approximately 150 LNG truck fueling stations at strategic truck-stop locations along major trucking corridors to form the backbone of "America's Natural Gas Highway."
As this cheap fuel is made increasingly available, demand for natural gas vehicles, and thus natural gas, increases. You can bet that the natural gas industry is prepared to reap in the benefits.
Interested in exploring the natural gas industry? Here's a list of the main players exposed to this trend. (Click here to access free, interactive tools to analyze these ideas.)
1. BP
2. Chesapeake Energy
3. Clean Energy Fuels
4. Cheniere Energy Partners
5. Devon Energy
6. EOG Resources
7. Cheniere Energy
8. Newfield Exploration
9. Southwestern Energy
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.
Kapitall's Becca Lipman does not own any of the shares mentioned above.