At first blush, it's understandable that investors aren't rushing to buy shares of natural gas for transportation leader Clean Energy Fuels Corp. (CLNE -1.06%). Over the past couple of years, the company's revenue has declined 17% from the peak in 2015, and after reporting a profit early in 2017, Clean Energy returned to a loss last quarter -- and a pretty hefty one at that -- after announcing that it would close 42 of its stations. Factor in all the attention around electric-powered heavy-duty trucks after Tesla's (TSLA -1.30%) recent announcement, and Mr. Market seems firmly convinced that natural gas for transportation is a dead end. 

Yet with all the hoopla surrounding electric vehicles (EVs), I'm convinced that investors are missing a big opportunity with Clean Energy Fuels right now. 

A square of blocks with arrows on them. All the arrows except one are black and point to the right. One is red and points to the left.

Image source: Getty Images.

Why natural gas has better prospects than you think

EVs are getting all the attention right now, which makes sense following Tesla's semi-truck announcement and the reports that the company already has orders for them, while several companies, including privately held Nikola Motor Company, are developing hydrogen fuel-cell Class 8 heavy trucks. At the same time, the city of Los Angeles' public-transit arm recently ordered 25 EV transit buses. Clearly, EVs are going to be a very big part of the future of transportation. 

An electric car and electric heavy truck plugged in for charging.

Image source: Getty Images.

But we're still years away from a commercial launch for these products. Tesla is aiming to bring its semi to market in 2019, but the company's history is littered with aggressive launch goals that the company falls years short of. It's probably more realistic to expect Tesla to bring its semi to market in 2020 or even 2021. Nikola Motor is also still years away, with plans to start road-testing its Nikola One and Two Class 8 tractors in 2018 and bring them to market in 2021. 

But here's the big kicker: A lack of infrastructure and functionality, coupled with high costs, will almost certainly limit adoption of these technologies for years. The vast majority of the trucking industry consists of small independent operators who must prioritize flexibility over the cheapest fuel, and even the lowest total cost of operation. It doesn't matter how cheap the EV is to operate if it means an independent operator will have to turn away work or wait around for a delivery to an area he or she can drive to. Time is money for truckers, and every hour a trucker isn't driving is an hour he or she isn't making money. Factor in that EV trucks will cost substantially more to acquire than diesel or natural gas, and that idle time is even more painful. 

The companies that have ordered Tesla Semis, including Wal-Mart Stores Inc. and J.B. Hunt Transportation Services Inc., don't have those same limitations and risks. They know exactly where their trucks are going, and this measure of predictability means they can plug these vehicles into their fleets and use them enough to get a big financial payoff. But since this type of situation makes up only a small fraction of the North American trucking fleet, it leaves a substantial market for natural gas to better address. 

Clean Energy Fuels dispensers at a refueling station.

Image source: Clean Energy Fuels.

It's also become apparent that electric drivetrains may prove to be unworkable for other heavy-weight vehicles such as garbage trucks for years to come, because of space and weight limitations. Furthermore, solid-waste companies are prioritizing renewable natural gas, such as Clean Energy's "Redeem," since their landfills are major sources of biomethane and it helps them cut pollution in the communities they serve. 

These are reasons Clean Energy Fuels has continued growing one of its most important metrics for years: gallons of fuel delivered. In 2011, Clean Energy sold 156 million gallon-equivalents of natural gas and is on track to deliver more than 350 million in 2017. Over the past year, the company has grown fuel volumes more than 8%.

Considering we're still several years away from even seeing the commercial viability of electric and hydrogen drivetrains for heavy-duty and other commercial transportation, and the reality that they will only address a fraction of the market when they do come to market, natural gas remains well positioned as a cleaner, cheaper alternative to diesel for many years to come. 

Improving financials

Over the past several years, Clean Energy's management has taken steps to recover the company's balance sheet and drive down expenses after taking on a substantial amount of debt to expand. The short version is that expansion coincided with the 2014 oil price collapse, and substantially slowed down the expected adoption of natural gas, as diesel prices fell substantially. 

And while growth -- if slower than anticipated -- has continued, it wasn't fast enough to offset the big increase in sales, general, administrative, and interest expenses at the peak. So management has taken a lot of steps to cut the debt and lower expenses. They are down 27% and 81% from the peak and set to fall even further in 2018:

CLNE SG&A Expense (TTM) Chart

CLNE SG&A Expense (TTM) data by YCharts

What the future holds

It's been a tough few years for Clean Energy Fuels investors, but I'm convinced that the next several years are going to prove very profitable. The company is moving beyond the struggles caused by the decision to leverage the business on a speculative bet that didn't pay off as expected, and shareholders have paid a big price in recent years as management refocused on cutting costs and profitable growth. 

While Wall Street has looked the other way, I have increased my investments in the company substantially this year. With expenses set to fall even further in 2018 and plenty of growth still to come, eventually the market will pay attention.