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JimVanMeerten (62.16)

Ethanol grows on a Green Plain

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November 16, 2009 – Comments (7) | RELATED TICKERS: GPRE

The buzz on renewable fuel just won't go away. Brazil uses soybeans and we use corn. Green Plains Renewable Energy -- GPRE -- press release states they are North America's fourth largest ethanol producer, operating six ethanol plants in Indiana, Iowa, Nebraska and Tennessee with a combined expected operating capacity of 480 million gallons of ethanol per year. GPRE also operates an independent third-party ethanol marketing service that currently provides marketing services to its affiliated plants as well as three third-party ethanol producers with expected operating capacity of 305 million gallons per year. Green Plains owns 51% of Blendstar, LLC, a Houston-based biofuel terminal operator with six facilities in five states. Green Plains' agribusiness segment operates grain storage facilities and complementary agronomy, feed, and fuel businesses in northern Iowa and southern Minnesota.

On a fundamental analysis bases analysts give the stock a strong buy rating and expect a 20.7 revenue growth with a price target of 15 which is 35% higher than its present price of around 11.

The stock came up on my BarChart filtering of the stocks hitting the most frequent new high with 13 new highs in the last 20 trading session and 5 for 5 recently. There has been a price appreciation of 70.62% in the last 65 days. BarChart's technical analysis indicators give it a 13 out of 13 buy signal for a 100% buy rating.

Additional positive ratings come from Wall Street Survivor where Mark's checklist has a Survivor Sentiment at 5/5 and Louis Navellier's Portfolio Grader has it a buy with a B rating overall and an A quantitative rating. I'm glad that more people than just me have noticed it.

Recommendation: I'm adding this to my Marketocracy New High portfolio and if you have room in your portfolio for a renewable energy company then buy GPRE - Green Plains Renewable Energy around 11 with a protective stop loss no lower than 9.

Jim Van Meerten is an investor who writes on financial matters here and on Financial Tides. Please leave a comment below or email FinancialTides@gmail.com

7 Comments – Post Your Own

#1) On November 16, 2009 at 4:32 PM, brickcityman (< 20) wrote:

Ethanol is so 2007.

 

(read into that what you will)

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#2) On November 16, 2009 at 4:50 PM, MrLungs (< 20) wrote:

Brazil does grow soybeans, but they make their ethanol out of sugarcane. Here in the US, soybeans are a major feedstock for biodiesel, the "other" biofuel.

 

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#3) On November 16, 2009 at 5:32 PM, hersch4u (< 20) wrote:

GPRE is the lone survivor of the large pure play ethanol companies. All the rest have all but gone. Next years revenue will top 1.5 billion. This is from a standing start of under one million just two years ago. Margins between corn and ethanol are improving, along with a good chance the industry will get a mandate to increase the blend from 10% to as much as 15% by next month. They have been under the radar screen for some time now. Look at their last quarter report and you will see why they should be trading around ANDE price. 

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#4) On November 16, 2009 at 5:35 PM, guiron (20.51) wrote:

Ethanol is not all that efficient when it comes to energy inputs. It requires a lot of fuel to grow. I don't see it as being the best option going forward, though the corn lobby in the US will fight tooth-and-nail to keep the government farm subsidies going (which is the only way it works as fuel, incidentally, otherwise the inputs would make it too expensive).

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#5) On November 16, 2009 at 7:53 PM, rofgile (99.31) wrote:

Ethanol ain't a long term investment.  That's all I've got to say.

-Rof

 (In Wisconsin, the corn lobby now runs advertisements to convince the public that ethanol is green, because so much of the public has caught on to the fact that corn ethanol requires more oil to produce it than the energy you get from it, thus is not green at all, but just a market distortion that currently exists)

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#6) On November 17, 2009 at 1:13 PM, Trailingstops (< 20) wrote:

I have bought quite a bit of GPRE in the past weeks, not for the ethanol, but for the ALGAE project they have going. They have the first and only algae production project on an ethanol plant in the world. Watch this video to learn about it: http://www.ketv.com/news/21298878/detail...
The thing that most people don't get about algae is that if this works just a little bit and they can make algae and just breakeven on the biodiesel and animal feed it can produce... the money they could make due to the CAP and TRADE laws by trading credits by being able to capture and use ALL of their CO2, could be very significant. And if it works as planned, every ethanol plant, along with every electric plant in the world would put the technology on their plants to use their CO2 to make money rather than just scrubbing it and releasing it into the air. GPRE could make money on licensing fees that could be more than their ethanol sales.

Now if it does actually work to make LARGE amounts of biodiesel and animal feed the way they are hoping, not only will they make money trading the credits, but the algae production could change the entire landscape of the energy market... if it really works and they could make as much oil growing the algae as all of the university people have been saying we could for quite some time now.

This is not going to happen in the future. GPRE acutally has the first ALGAE PRODUCTION PROJECT UP AND RUNNING IN THE WORLD.

I hope people grasp what I just said. It hasn't happened yet, but they will know with the next 90 days or so if it is going to be commercially viable to grow the ALGAE, but even if it isn't and could just be used to make a bit of feed and biodiesel, the CAP and TRADE Credits would still be well worth putting the technology on every plant in the world. But I bet the process will work and they will be able to grow algae and make massive amounts of diesel and animal feed by growing it.

All you need to grow ALGAE is sunlight, CO2 and warm water, and ethanol plants produce MASSIVE amounts of the last two.

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#7) On November 17, 2009 at 1:26 PM, Trailingstops (< 20) wrote:

The last link for the video of the ALGAE project was changed. I think this one will work: http://www.ketv.com/news/21298878/detail.html

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