Green Plains Renewable Energy: A Smart Play in Ethanol

The buzz on renewable fuel just won't go away.

Brazil uses soybeans and we use corn. Green Plains Renewable Energy (GPRE) states it is North America's fourth largest ethanol producer, operating six ethanol plants in Indiana, Iowa, Nebraska and Tennessee with a combined expected operating capacity of 480 million gallons of ethanol per year. GPRE also operates an independent third-party ethanol marketing service that currently provides marketing services to its affiliated plants as well as three third-party ethanol producers with expected operating capacity of 305 million gallons per year. Green Plains owns 51% of Blendstar, LLC, a Houston-based biofuel terminal operator with six facilities in five states. Green Plains' agribusiness segment operates grain storage facilities and complementary agronomy, feed, and fuel businesses in northern Iowa and southern Minnesota.

On a fundamental analysis basis, analysts give the stock a strong buy rating and expect a 20.7 revenue growth with a price target of 15, which is 35% higher than its present price of around 11.

The stock came up on my BarChart filtering of the stocks hitting the most frequent new high with 13 new highs in the last 20 trading session and 5 for 5 recently. There has been a price appreciation of 70.62% in the last 65 days. BarChart's technical analysis indicators give it a 13 out of 13 buy signal for a 100% buy rating.

Additional positive ratings come from Wall Street Survivor, where Mark's checklist has a Survivor Sentiment at 5/5 and Louis Navellier's Portfolio Grader has it a buy with a "B" rating overall and an A quantitative rating. I'm glad that more people have noticed it.

Recommendation: I'm adding this to my Marketocracy New High portfolio and if you have room in your portfolio for a renewable energy company then buy Green Plains Renewable Energy around 11 with a protective stop loss no lower than 9.

Comments

[sodajerk:]

Sorry Jim - you lost me with the oximoronic headline "Smart Play in Ethanol"

Nov 16 09:38 PM

[Gian:]

Brazil uses sugarcane, not soybeans, in its ethanol complex.

Nov 17 12:14 AM

[Jim Van Mee...:]

That was not my headline -- the editors change the headlines to be catchy

Nov 17 09:33 AM

[sjs1052:]

I have been hot on this stock since June when ethanol margins started to improve. Ethanol is a smart play right now when you are sitting on a $.50 gross profit for every gallon produced. Whether ethanol is a viable option for the future is yet to be seen but as long as we are still driving and using gasoline ethanol is going to have demand. Especially if they increase blending to 15% opposed to 10%. I personally feel the optimal range is 25% but the marine community is against it. This is a GREAT PLAY at the moment and should be overweighted in all portfolios

Nov 17 02:56 PM

[IsThisRight:]

Brazil is at full ethanol capacity using its cane for sugar and price is up. So, in the U.S., as import is tight, supply is in balance , price has moved upwards.
GPRE is leading the public companies, but ALL the ethanol producers are benefiting.

The smart play for investors is to play the whole industry: corn is plentiful, scarcity of capital limits brand new plants and other forms of ethanol, and demand for daily use (fuel for cars) is constant.

The SMART thing about the industry is that it can avoid exporting $20B yes improve the value of the dollar.

The second way for the SMART investor to think about this : as a new industry, in 2010 it will produce 12 billion gallons. Where we to pay 20c profits/gallon, this is $2.4B profit. Take that to the banks and get $10B in construction loan for growth projects. Create Jobs, improve our import/export balance. We will not eliminate oil nor our national debt but we can decrease it.

Nov 17 05:15 PM

[sjs1052:]

Very well put

Nov 18 09:18 AM