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Best Stocks To Make Money Off Ethanol
By Mr Ethanol | April 24, 2008
TheStreet.com:
Ethanol, to be sure, is here to stay.
But if you look at the falling stock prices of companies that produce it below, you might be tempted to view it as “demon ethanol.” Unfortunately, some very common myths about ethanol may keep you from investing in these stocks now that the prices have been beaten down.
Why should investors take another look at the ethanol concept?
Here are some ideas for investors in high-growth stocks to consider:
* The new law creates a big ethanol and biofuels market opportunity.
* The Energy Independence and Security Act signed last December mandated fuel economy, development of biofuels and energy efficiency. This law set a goal of 36 billion gallons of alternative fuels (largely ethanol) by 2020. It is widely recognized that the maximum production of ethanol from corn starch is only 15 billion gallons a year, implying a mandated production shortfall of some 21 billion gallons a year.
* 2 large companies produce nearly half of the ethanol fuel in this country, and the whole industry capacity would have to go up sixfold to meet the mandate.
* Think about this a minute. At the current average pump price of $2.77 a gallon of blended E85 ethanol, President Bush and Congress created a market with an annual revenue potential of more than $100 billion a year. This is big business.
* Investors initially reacted very positively to this news last November, driving the ethanol stock prices up 40% to 60% in 30 days.
Then the next reality set in.
But the new mandate also creates a supply gap.
Ethanol is a great opportunity, but it is not without its challenges. Read on…
Topics: Ethanol, Investing, Money, Stock Market, Tips |
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