Back in 1993, when drugmaker Amarin's (AMRN -0.49%) shares first hit the market, it might have cost you $1,425 to buy one share (adjusted for splits). Go forward a few decades, and that one share now costs a little over $5. Clean Energy Fuels (CLNE 1.52%) , meanwhile, hit its high-water mark in 2012, with the share price almost touching $25. Now the stock has lost 90% of its value, and currently trades for $2.50.

Yet there is reason to be optimistic about both companies. Read on to see why you might want to buy these shares at rock-bottom prices.

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Image source: Getty Images.

The market for Amarin's Vascepa is huge

One-quarter of all adult Americans have high triglycerides. If you're one of them, it means you have too many fats (lipids) in your bloodstream. This is an unhealthy state of affairs that raises the risk of heart damage.

Amarin's pill, Vascepa, reduces triglyceride levels. Several years ago, the company wanted to market this drug as helpful to reducing the risk of heart attack or stroke. But the FDA's response was the equivalent of "Not so fast; there's no evidence that reducing triglycerides does all that. You're going to have to prove it."

So Amarin spent the next several years doing exactly that. In 2018, the company revealed the results of its Reduce-It trial. And it was a spectacular success. Everybody in the study was on statins, but patients who also took Vascepa to reduce triglycerides saw significant improvements in heart health. The drug reduced stroke by 28%, reduced heart attacks by 31%, and reduced death by 20%, compared to the group that was on statin-only therapy.

This amazing news sent the stock on a rampage -- it quadrupled in one day. Amarin investors were overjoyed, seeing visions of a possible $20 billion valuation in the near future.

But that's not how it worked out. First the world was hit by COVID-19. That health scare made it difficult for the company's sales force to visit hospitals and educate doctors about Vascepa. Nonetheless, Amarin's revenue was up 112% in the first quarter of this year. But in March came a disaster: A trial judge out in Nevada ruled that the company's Vascepa patent was invalid, on the grounds that it was "obvious."

The stock dropped 70% in a day. The share price fell all the way to $3.36 in September. Since then the stock has started to bounce back, rising 50% in less than a month. Is this a "dead-cat bounce" (temporary recovery), or are there any reasons for optimism?

I'm a firm believer in the latter. After all, Amarin still has half a billion dollars in net cash. And Vascepa is halfway to blockbuster status already, with $500 million in annualized sales. Ani Fadia, an analyst at SVB Leerink, estimates peak sales of $2.8 billion a year for Vascepa in Europe alone. Europe (and Asia) are both sizable markets, and Amarin still has patent protection there.

Right now the market has priced Amarin for next-to-nothing growth, with a price-to-sales ratio of 3. Yet the opportunity for Vascepa in the rest of the world remains huge. Even in the U.S., it's still a sizable opportunity, with almost 10 million people who are on statin medication with high triglycerides.Understand that Vascepa is a cheap pill right now. Its current retail price (without any generic competition yet) is about $3 a pill, or $6 a day. Because the drug is already cheap, Amarin estimates that "little, if any, money, is likely to be saved by patients or by insurance companies from the availability of a generic version of Vascepa."

At current prices, Amarin has a $21 billion total addressable market in the U.S. ($6 x 365 days x 10 million people). It's an odd situation in that Amarin's drug is going off-patent before having been established in medical practice. The future of U.S. sales is highly uncertain, both for Amarin and for any generic competition.

Further approval of Vascepa in Europe (expected in early 2021) should send the stock higher in the near term. Investors have reason to be very bullish about the opportunity in the rest of the world. Sales in the U.S. will be in a state of flux for some time. But the cheap stock price gives us significant upside. 

Did the electric car kill Clean Energy?

What's the most environmentally friendly company on the planet? My nominee would be Clean Energy Fuels. You know the "Green New Deal" being discussed in Congress, which is focused on renewable energy? The legislation even mentions "farting cows" as a source of pollution to be addressed. Clean Energy has inspired a market in which people take that methane gas, and other organic waste from agriculture and landfills, and recycle it into renewable natural gas.

This type of natural gas is chemically the same as natural gas found in the earth. Producers are now turning this renewable resource into liquid natural gas (LNG), and this fuel -- which Clean Energy calls Redeem -- is replacing dirty diesel fuel in heavy-duty trucks.

The company has over 550 natural gas stations in the United States and Canada, and it has already sold over 400 million gallons of natural gas to vehicles that have been equipped to run on that fuel, removing 745,000 metric tons of greenhouse gas emissions from the air.    

UPS is a major client of Clean Energy. Other big clients include FedExWaste Management, and Amazon. Clean Energy is now profitable and is growing Redeem sales by 30% a year.

So why did the stock tank? The market seems to believe that heavy-duty trucks will soon run on electricity, not LNG. In 2017, Elon Musk and Tesla announced that the electric-car company would offer an electric truck, named Semi, in 2019. But it's still not here, and even if and when it does arrive, there are still major problems with the idea that it will win major market share. Using current technology, the battery to run a Semi would weigh over 10,000 pounds. In and of itself, that would kill any demand for the truck. 

Aside from that, renewable natural gas is actually an environmentally superior solution compared with electric trucks. By removing harmful methane gas from farms, wastewater plants, and landfills, RNG is not just a carbon-neutral solution, it's carbon-negative.

While it's always dangerous to bet against Mr. Musk, semi trucks are one area of the market that are unlikely to go electric any time soon. Tesla bulls might want to hedge their exuberance a bit and buy some shares of Clean Energy Fuels, which is likely to be the ultimate winner as the $20 billion semi-truck market goes green.