Renewable Energy Group (NASDAQ:REGI)

CAPS Rating: 4 out of 5


Player Avatar TMFBlacknGold (98.81) Submitted: 10/19/2012 11:05:43 AM : Outperform Start Price: $4.96 REGI Score: +56.09

REG is just beginning to hit its stride. The company has a current production capacity of 212 million gallons per year (mmgy) with another 135 mmgy under construction. Furthermore, REG is building an impressive distribution network along the country’s most important transportation hubs. Through the first six months of 2012 REG produced 82 million gallons of biodiesel, which made up approximately 15-17% of the total biodiesel produced in the United States.

Wall Street struggles to maintain confidence in REG for long, as the company is currently constantly tied to the government announcements of the RFS2 program. I think that's a little unfair, as the biodiesel production requirements and targets will continue to rise for the foreseeable future and don't have the same plateau as corn-based EtOH. Within the next year or two I see shares of REG breaking out of their dependency on RFS2 catalysts (although they will certainly help) and appreciating to a much more realistic price that factors in growth, market reach, and feedstock advantages.

As of last quarter, shareholders' equity would put shares at $11.37 (a 127% premium to $5 per share). Shareholders' equity has grown 146% over the last three years and 53% over the last three quarters - while shares have been cut in half. Hmmm...

Read my full write-up here:

Report this Post 3 Replies
Member Avatar TMFBlacknGold (98.81) Submitted: 3/5/2013 6:16:12 PM
Recs: 1

Thought about closing this before earnings to keep my score-leader spot, but decided against it. Guess that wasn't the right move from a CAPS game perspective.

Nonetheless, REG is still set to capitalize on the long-term trend in biodiesel expansion. Why the company's earnings don't worry me:

Member Avatar TMFBlacknGold (98.81) Submitted: 5/2/2013 5:21:23 PM
Recs: 0

REG has soared quite a bit since my original pick, but still remains below book value ($14.85 per share including preferred stock) with plenty of growth ahead. Just don't invest for the wrong reasons:

Member Avatar AnsgarJohn (98.11) Submitted: 12/19/2013 2:29:37 PM
Recs: 0

Real money pick here at $11,11 with change in Renewable Volume Obligations? I just bought based on a Graham Defensive screen.

Featured Broker Partners