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Is Ethanol A Viable Alternative?
By Mr Ethanol | November 27, 2007
NewsMax:
Ethanol is coming more to the forefront in financial news, not so much for its potential as a renewable fuel source but more with respect to ethanol’s future as a capital investment opportunity.
In recent months the small-cap ethanol industry, in the range of $100 million to $1 billion, has undergone a major devaluation in share value off its 52-week highs. The small cap stocks selected from across the board on Nov. 23 are Aventine Renewable Energy Holdings Inc. (AVR); Green Plains Renewable Energy (GPRE); MGP Ingredients (MGPI); Pacific Ethanol (PEIX): The Andersons Inc. (ANDE) and VeraSun Energy (VSE).
Losses in share value range from 58 percent to 87.7 percent, averaging 70 percent. The price of ethanol has dropped from $4 per gallon in 2006 to $1.50 in 2007.
This is a far cry from early 2007 when ethanol looked like the dream investment of the future.
However, there were skeptics in the marketplace who began issuing warnings earlier in the year. One such person was Jim Cramer, CNBC host of “Mad Money,” who was quoted on Web site seekingalpha.com, June 19, in an article by Andy So entitled “An Ethanol Stock Watchlist (ADM, VSE, PEIX, MGPI, ANDE).”
Cramer wrote: “Ethanol is in the last stage of a speculative fad’s life cycle. I know this because we see it all the time in these hot sectors. We saw it with the dot-coms in 1999, with the power merchants in 2000, with the oil service names last year and into this year and with solar power. Now ethanol is following the same pattern.”
Topics: Ethanol |
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