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Ethanol Stocks To Know (AVR, PEIX, VSE)
By Mr Ethanol | November 5, 2007
Investopedia Advisor Commentary:
With oil prices above $90 a barrel, the prospects for alternative energy are looking better and better.
The leading alternative is Ethanol, an alcohol-based fuel derived from corn, sugar cane and other feedstock. It is being used in some parts of the country in the form of E85 ethanol, which is made of 85% ethanol and just 15% gasoline. The major car manufacturers have been making considerable efforts to develop vehicles that run on E85, and demand could pick up significantly.
Going Green?
Ethanol stocks are a little cheaper than they were a few months ago. I think this is primarily due to fragmentation in the market. Ethanol producers have been increasing demand for products like corn, driving their input prices up, but actual demand for the final product is lagging supply and putting pressure on the price of ethanol.
All of this is bad news for ethanol companies, but don’t be too pessimistic. High oil costs seem to be here to stay. Even if we pull back to $75 a barrel, the prices will still be historically high. So, you can probably expect alternative energy demand to start trending upward.
The Players
Even the big energy players such as Marathon Oil (NYSE:MRO), BP (NYSE:BP) and Chevron (NYSE:CVX) are increasing efforts to develop renewable alternative energy sources.
Marathon Oil, in particular, has focused on developing ethanol and has invested in an ethanol refining plant as past of a joint venture with Andersons Inc. (Nasdaq:ANDE), as reported in the story “Renewed Effort” in The Wall Street Journal on October 29. These are solid companies if you want to have the exposure to oil, while maintaining the possibility benefiting from a boom in alternatives.
While those companies are good, let’s focus on the three most notable pure ethanol players…
Topics: Ethanol, Investing, Stock Market |
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