Not every stock that soars is a "meme" stock and I am beginning to get sick of the notion that Reddit's WallStreetBets, the most scatological of sites, is behind every major move in this market.
Take Cleveland-Cliffs (CLF) . We recently profiled this steel company as one of the cheapest in the entire market. It's an amalgam of older steel companies and its iron ore base that has been able to take advantage of the relentless increase in price for all sorts of different kinds of steel. We had them on "Mad Money" when the stock was $18-and-change and were astonished at how inexpensive it was, given that there was almost no new capacity coming on in the industry and the mills that have been shut down are simply uneconomic even at these prices. Plus, President Joe Biden is just as protectionist against Chinese steel as President Trump was, so I am not as worried about dumping as I once feared.
Cleveland-Cliffs is a storied iron ore company, a commodity that's very difficult to profit from. Now it is vertically integrated through the purchases of AK Steel and ArecelorMittal USA. That combination has required the company to take on a lot of debt, but it can pay it down by issuing stock, as it did earlier this year at much lower prices. I think it can do so again and as long as it chips away at the roughly $5 billion in debt, I think the stock goes higher, especially because it's spewing cash at a rate that makes it one of the cheapest stocks in the entire market. Yes, it is true that, like AMC (AMC) , a meme stock, it can use the strength by issuing equity so you could argue it's a virtuous cycle, but what matters to me is that it has earnings, so it really does get less dangerous, because of the stock-induced debt pay-down as it goes higher.
Or, take Clean Energy Fuels Corp. (CLNE) , another mistaken meme play. Longtime viewers of "Mad Money" are no stranger to this stock, which had been championed by the late T. Boone Pickens, a friend of the show. CLNE, run by Andrew Littlefair, was based on the idea that natural gas would be a cleaner fuel than oil so trucking companies would flock to it.
The fuel never took off and the company floundered, suffering year after year of losses.
Now, though, it's largely in the business of selling renewable natural gas -- 73% of its production -- and this time it's got big supporters like Amazon (AMZN) , which is potentially its biggest customer. Now like Plug Power (PLUG) , Amazon has a deal where it got warrants from Clean Energy, something that could come back to haunt them in the form of some bad press if Amazon dumps the stock the warrants give them. Plug got some real bad publicity on that one. In this case, according to Littlefair, Amazon is committed to hundreds of millions of gallons of RNG with them. CLNE is building 19 new stations for them this year and Amazon is using 26 existing stations. The potential for Amazon alone is 15,000 heavy duty trucks.
The deal solidifies the joint venture relationship Clean Energy has with BP Plc. (BP) and Total, two no-slouch players in an energy industry under fire for not doing enough to clean the air they naturally soil.
The company is now cash flow positive from operations and they have $300 million cash, so different from the old days. Littlefair has set the company up to make a lot of money next year and it's a pretty shocking development from what we remember during the days weaker less competitive days. Then, again, they are now selling the cleanest lowest carbon fuel in the world. One day maybe green hydrogen will be the fuel of choice. Right now, though, its RNG from Clean Energy's 560 fueling stations.
Two stocks, Cleveland-Cliffs and Clean Energy Fuels, both buys, with or without meme affection.
This story has been updated.
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