The key takeaway is that Clean Energy Fuels Corp (NASDAQ:CLNE) chose to build out a refueling network (at considerable cost and risk) to change the conversation, and support the engine makers and shippers both. All the cards, so to speak, are now on the table; natural gas is a viable choice for shippers today.
More to the story
Besides Clean Energy, Royal Dutch Shell plc (ADR) (NYSE:RDS.A)-B), -A) is also making a serious move into LNG for truckers, working with TravelCenters of America LLC (NYSE:TA) to add LNG fueling lanes at up to 100 existing TA and Petro locations. While seeing a behemoth like Royal Dutch Shell plc (ADR) (NYSE:RDS.A) jump in the mix could be enough to spook some investors, it’s important to remember that competition from the “big boys” also serves as validation of the market opportunity. Additionally, Shell’s stability, sheer size, and 5% dividend offers a nice anchor with much less downside risk, compared to the much more speculative Westport and Clean Energy Fuels. Simply put, Royal Dutch Shell plc (ADR) (NYSE:RDS.A) is a low-downside, low-upside way to add natural gas to your portfolio.
TravelCenters of America LLC (NYSE:TA) seems to have the most to lose. If truckers adopt LNG more quickly than it and Shell can build out those first 100 stations, it could face serious material impact to its business. While Clean Energy and Pilot/Flying J only have about a dozen stations open today, there are another 70 complete that could be operational within weeks, or even days, as needed. TravelCenters offers little in the way of upside, and while revenues have grown substantially over the past three years, much of that has been driven by the rising cost of fuel versus true organic growth. And with the major benefit of CNG being its lower cost versus diesel, growth in adoption could actually see TravelCenters of America LLC (NYSE:TA)’ revenues decline.
Foolish bottom line
It’s still early in the game. None of these companies have seen any real material return on the natural gas business for over-the-road trucking. But by the end of the year, the rate of adoption could be happening in a very real way, and that’s why I own Westport Innovations Inc. (USA) (NASDAQ:WPRT) and Clean Energy Fuels.
Here’s some perspective on the opportunity: If 3% of the trucking business adopts natural gas over the next year or two, and Clean Energy (with the lion’s share of refueling stations) is able to capture half of that business, it will grow by 50%. The market opportunity is massive. Westport Innovations Inc. (USA) (NASDAQ:WPRT)’s opportunity reaches all over the globe, and its growth could be just as exponential as Clean Energy’s.
Me? I’ve put my money where my mouth is. What about you? Share your thoughts in the comments below.
The article When a Good Quarter Isn’t Really Good, But It Doesn’t Matter Anyway originally appeared on Fool.com is written by Jason Hall.
Jason Hall owns shares of Westport Innovations and Clean Energy Fuels. The Motley Fool recommends Clean Energy Fuels and Westport Innovations. The Motley Fool owns shares of Westport Innovations. Jason is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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