Is Cielo Waste Solutions stock a buy?

Its share price has cratered.

Does that mean that Cielo Waste Solutions (Cielo Waste Solutions Stock Quote, Chart, News, Analysts, Financials TSXV:CMC) is now a buy?

Calgary-based Cielo owns a patented process for converting waste feedstocks into fuel. The company’s stock traded as high as $1.65 back in 2021 back a lack of success getting its plants up and running has caused the stock to fall to mere pennies today.

On June 21, the company reported its fiscal 2023 results, posting a loss of four cents a share, double the previous year’s loss. What’s more, the company’s assets decreased by $24.2-million. A few months later, CMC announced that it had sold its Fort Saskatchewan property for $13-million.

Stonecastle Investment Management’s Bruce Campbell says that in late 2023, the proof is in the pudding with Cielo.

“Cielo’s not one that we own right now,” Campbell told BNN Bloomberg recently. “It’s one that we’ve watched for quite some time and it had a parabolic rise up and then quite a ski slope move down. What we are waiting for with Cielo is for them to deliver what they told us they are going to deliver.”

Campbell said the company’s renewable diesel plants need to reach capacity on an hourly and daily basis and generate the product at a low enough cost to make a profit. The fund manager says he has yet to see that come to fruition, but would be very interested in the stock if it did.

Problems have been plaguing Cielo for some time. In a piece written for Seeking Alpha from September of 2021, Night Market Research said the bull case is crumbling on the stock.

“Shares of Cielo Waste Solutions have been supported by expectations the company was approaching commercial scale production, including achieving desulfurization capability in the very near term,” the piece argued. “Perception was driven by investor relations calls in which CEO Don Allan continued to hype Cielo’s progress, public events such as the groundbreaking of a new facility, and videos of the installation of critical equipment. However, in our view, no meaningful progress has been made and the Cielo story is worse now than at the beginning of the summer. Cielo finally admitted being massively behind production expectations. It’s had to delay desulfurization – again. It’s been forced to restate its financial statements, resulting in the company being in technical default of disclosure requirements necessitating a management cease trade order.”

At press time, shares of Cielo Waste Solutions were trading at $0.04.

What does Cielo Waste Solutions do? (via company handout)

Cielo Waste Solutions Corp. was incorporated under the Business Corporations Act (British Columbia) on February 2, 2011. Cielo is a publicly traded company with its shares listed to trade on the TSX Venture Exchange (“TSXV”) under the symbol “CMC,” on the Frankfurt Exchange (“DAX”) under the symbol “C36”, as well as on the OTC Venture Market (“OTCQB”), under the symbol “CWSFF.” The Company’s strategic intent is to become a leading waste-to-fuel company using economically sustainable technology while minimizing the environmental impact. Cielo has a patented process that can convert waste feedstocks, including organic material and wood derivative waste, to fuel. Having demonstrated its ability to produce diesel and naphtha from waste, Cielo’s business model is to construct additional processing facilities. Cielo’s objective is to generate value by converting waste to fuel, while fueling the sustainable energy transition.