We recently compiled a list of the 10 New Stocks Reddit’s WallStreetBets Is Buying. In this article, we are going to take a look at where Clean Energy Fuels Corp. (NASDAQ:CLNE) stands against the other WallStreetBets-approved stocks.
The surge of the Internet and the easy access to financial information, courtesy of the personal computing revolution, means that investing is no longer limited to the professionals. While Wall Street of the 1950s and onward was made of traders relying on hand made graphs of daily stock price movements to decipher long term trends, now, anyone with a computer and an internet connection has access to similar and more sophisticated tools.
This has also led to the rise of retail investing, which first made its mark during the coronavirus pandemic. Between 2020 and 2021, more than thirty million brokerage accounts were opened in the US, and the low interest rates coupled with coronavirus stimulus checks led to these traders accounting for 15% of the market’s trading volume in September 2020. Data from investment bank Morgan Stanley shows that retail traders tend to prefer well known consumer facing stocks, and crucially, the bank’s proprietary methodologies also show that in the five years between 2016 and 2021, stocks that garnered interest from retail investors ended up outperforming those without it.
Building on this, the pandemic and the surge of information in today’s age have also shifted the dynamics of how America views wealth preservation. A fresh survey from Gallup shows that while real estate continues to dominate as Americans’ favorite investment regardless of their income bracket, stocks come in second place for middle and high income families. This preference for equities dropped after the Great Recession of 2008 which wiped out some of the biggest companies in the world after risky bets on mortgage securities shattered Wall Street’s public image. According to Gallup’s data, the percentage of Americans who own stocks is the highest in 2024 since 2007 – or before the global economic crisis. Stock ownership stood at 52% of those polled – an all time low – in 2013 and 2016.
It slowly picked up and sat at 55% in 2020, and has risen every year since then to a post 2007 high of 62% in 2024. In fact, the last time stock ownership was higher than it is right now was in 2004 when 63% of Americans owned stocks during an era when interest rates were relatively low and the housing market was booming – economic conditions that are on a completely different spectrum than what we’re experiencing right now.
Building on this, the divergence between retail investors and hedge funds came to the forefront of the investing world during the meme stock mania that saw the former pump up video game retailing and entertainment chain stocks as they rallied on social media and particularly Reddit’s WallStreetBets, this trend continued in 2023. Data from S&P shows that in October when market sentiment about interest rates and the economy was at its lowest, retail investors sold off $15.64 billion in stocks for their largest monthly outflow since 2021. However, at the same time, the hedge funds appeared to smell blood. In a classic illustration of Warren Buffett’s mantra of being greedy when others are fearful, the hedge funds bought $5.56 billion in stocks. Their three favorite sectors were real estate, utilities, and materials, with real estate and utilities witnessing the inflows after smart money flew out in the prior month. For some great Warren Buffett quotes, you can check out Warren Buffett’s 35 Best Quotes About Business, Investing, and Life.
Judging by this, it appears that retail investors are driven by their economic perceptions instead of setting up their portfolios during a downturn. This is also evident in Charles Schwab’s Trader Sentiment Survey released in February 2024. The bank’s data reveals that 52% of retail traders planned to move more money into stocks during Q1 2024, which marks a 7 percentage point sequential gain. This also coincides with their view of the economy, as 48% think that the US will avoid a recession in 2024 and 53% are bullish for the stock market.
With this context and as retail traders start to become bullish once again, we decided to take a look at how their previous bets have performed. The GameStop short squeeze of 2021 brought the Reddit subreddit WallStreetBets into the limelight and made Roaring Kitty a global celebrity. We covered some WallStreetBets stocks in 2021 and 2023, and in this piece, we’ll analyze how the top 2021 stocks have performed since then. If you’re interested in similar content, we also evaluated Cathie Wood’s stock performance as part of our coverage of 10 Best Stocks to Buy and Hold For 5 Years According to Cathie Wood.
Our Methodology
For our list of stocks, we took a look at our 2021 coverage of Forget AMC and Gamestop: 10 New Stocks Reddit’s WallStreetBets Is Buying and evaluated how these stocks have performed since June 2021. The stocks are re-ranked according to their share price percentage performance.
For these stocks, we also mentioned hedge fund sentiment. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A row of fuel pumps at a fueling station, displaying the magnitude of the energy revolution.
Clean Energy Fuels Corp. (NASDAQ:CLNE)
Share Price Performance Since July 2021 Start: -76.04%
Number of Hedge Fund Investors In Q1 2024: 20
Clean Energy Fuels Corp. (NASDAQ:CLNE) is a California based company that provides natural gas infrastructure to power up vehicles such as trucks. It is also one of the few companies of its kind that not only provides natural gas for transportation but also provides renewable natural gas derived from animal waste. This means that while Clean Energy Fuels Corp. (NASDAQ:CLNE) enjoys significant competitive advantages and low competition, it has to create its own industry. This requires investment, and despite being in business for years, Clean Energy Fuels Corp. (NASDAQ:CLNE) has mostly operated at a loss. The stock came at the center of the meme stock mania in June 2021 when its shares soared by 29% after data showed its popularity on internet boards. CNBC’s Jim Cramer initially tweeted that Clean Energy Fuels Corp. (NASDAQ:CLNE) had “had no real revenue growth and almost no profitability in a decade” but later shared that perhaps the firm’s time had come after mentioning its deals with big ticket names like Amazon. After the mania was over, the stock declined by 8% in August. This followed a 17% drop in June after the retail buying as the market learned that Clean Energy Fuels Corp. (NASDAQ:CLNE)’s largest investor, oil mega giant Total, had sold ten million shares.
Amidst years of struggles, Clean Energy Fuels Corp. (NASDAQ:CLNE)’s management shared some progress on its market prospects during the first quarter earnings call when it highlighted:
It pleases me to say that we kicked off 2024 with a strong first quarter. Our base business of fueling fleets, constructing and maintaining stations for those fleets, and providing other services that keeps trucks, shuttles and buses operating on a clean fuel performed well. We also made good progress in our business of developing renewable natural gas dairy projects. I’ll expand with a few more details on both in a moment. The 8.6% year-over-year growth in RNG fuel volumes is a testament to the stability and growth in our base business. In addition, it reflects the significant RNG volume that is now flowing through the new state-of-the-art fueling stations that we have built and opened over the last two years, where we have an anchor customer in Amazon.
We are also seeing other vehicles begin to fuel at these stations, which helps our fuel margins. As always Bob will give you more details about our financial results, but I would be remiss in not calling out the $12.8 million in adjusted EBITDA for Q1 compared to minus $4 million of Q1 of last year. The significant upswing is attributed to the growth in our core business that I just mentioned, as well as circumstances which we found ourselves during the beginning of last year with historically high natural gas prices in California that impacted our bottom line. Our balance sheet remains strong with almost $250 million of cash and investments on hand. And you should see continued, improved adjusted EBITDA results through this year. I’d like to take a moment to address the environmental credit situation because I think some might tie the ups and downs of those prices a little too tightly to our overall business.
Overall CLNE ranks 4th on our list of the WallStreetBets-approved stocks to buy. You can visit Forget AMC and Gamestop: 10 New Stocks Reddit’s WallStreetBets Is Buying to see the other WallStreetBets-approved stocks that are on hedge funds’ radar. While we acknowledge the potential of CLNE as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than CLNE but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
