Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What's Happening: Leading natural gas for transportation fuel provider Clean Energy Fuels Corp (NASDAQ:CLNE) is on fire Friday, up 15.7% at 11:15 a.m. EST. Since the end of January, the stock is up a lot more:
Why It's Happening: In short, the company's earnings report came in much better than expected, with the company reporting a net profit in the fourth quarter, and actually accelerating fuel sales while oil prices plummeted. This is a big deal since it actually competes against the price of gasoline and diesel. Maybe most impressive was the fact that fuel sales increased 33% in the fourth quarter, a big jump from the roughly 20% volume increases the company has managed for most of the past few years. The company also reported a significant reduction in capital expenditures for 2015, reduced debt, and reduced operations expense. These will combine to help the company reduce its cash burn over the next year. With $150 million in debt coming due in 2016, that's an important move.
There's also a good chance that we are seeing a bit of a "short squeeze" as well. Shares sold short has trended down over the past year, but at 17% of shares last week, it is still very high. Friday's jump could be fueled by short sellers trying to cover their positions.
Is the stock a buy today? I think it is. Not only is the company growing at better than 20% annually, it's orders of magnitude are larger than its nearest competitor, and it just reported big improvements in its cost structure. Looking for more details? Check out my in-depth earnings write-up here.
Jason Hall owns shares of and options for Clean Energy Fuels. The Motley Fool recommends Clean Energy Fuels. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.