- A recently announced Brazilian tax credit to ethanol exporters has driven down PEIX stock price by more than 30%.
- U.S. ethanol industry's outlook currently remains bleak with depressed ethanol prices and potential competition from Brazilian sugarcane ethanol imports.
- Given the back story of the ethanol tax credit however, I believe the market reaction is largely exaggerated.
- With upcoming catalysts, we could see share prices finally begin to recover from the overselling.
- PEIX is 50% undervalued and can be played cautiously in the short-term.