Buying This Energy Stock On The Dip Is A Textbook Investment Opportunity

According to Raymond James, Clean Energy Fuels shares represent a "textbook buy-on-the-dip opportunity," but investors may have to get ready for a bumpy ride. 

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Clean Energy was upgraded from market performance to outperforming the firm. According to the report, the price target for Friday is set at $6 a share, which represents a 42.8% increase over Wednesday's close.  

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Pavel Molchanov, an analyst at Emerson Network Power, thinks that the company could benefit as a result of the decarbonization of fleets caused by natural gas fuels, such as those derived from biogas, being used more in the transportation sector. 

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Molchanov wrote in Wednesday's note that "Clean Energy is diversifying its business model from a pure fuel distributor to a company producing its own RNG by 2023, which is a move that will increase profitability." 

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In any case, he pointed out that "the development of a growth story as positive as this one needs to be balanced with the fact that this commodity business is highly sensitive to policy incentives from both the federal government and the states, including a high degree of reliance on California's [Low Carbon Fuel Standard]."

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Molchanov says it is absolutely essential to trade tactically in this stock, and the reason for that is that the stock's always volatile nature makes it impossible for you to hold it for a long period of time. This means you should make short-term trading calls.

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Before the bell Wednesday morning, Clean Energy stock was up 3.3% on a share basis. So far this year, the stock is down 19.2% from where it was at this time last year.

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