David White

Is the Ethanol Mandate Likely to be Repealed?

Redbaron: The US government gave out $385 million in 2007 for research on cellulsic ethanol. The government and a lot of other people seem to think the prospects for efficient cellulosic ethanol production are very real. I did mention that the "promise" of cellulosic ethanol was a possibly good reason not to kill the corn ethanol business. There is a lot of infrastructure that would be destroyed. This would then have to be rebuilt when cellulosic ethanol became truly viable. I think this is a valid point. Another point is that cellulosic ethanol apparently causes less pollution than gasoline (as opposed to the made from corn variety, which cause more pollution). Further people are talking about harvesting switchgrass crops in order to make cellulosic ethanol. This may indeed be the first step. However, the real future appeal of this to me is just using people's garden trimmings. Most cities already collect these each week. They would only have to change the delivery points to ethanol plants (or railyards for transport). This process would mean we could produce a lot of ethanol for very little effort.

I should also note that they currently have two processes to produce cellulosic ethanol. One is fermentation. The other is gasification. Currently both of these are relatively expensive. However, I don't find it hard to believe that enginuity will find a way to make it cheaper.

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LDK has already corrected due to its recent adverse publicity, which now appears to have be undeserved. My estimate for its 2009 based PE is 6-10. Its FPE (for 2008 earnings) is 24. It has a PEG of .35. These are very good numbers for a fast grower. Why would you say it is ripe for a pullback? It has already had a sharp one.