+ Watch GEVO
on My Watchlist
Good technology poised for market adoption.
I can't officially write about Gevo due to its low market cap (disqualified from company-focused articles in TMF's conduct rules), but I still see it as a good, perhaps amazing, long term investment with some big caveats. Let's first admit that the market is tying market cap to book value for good reason. The company needs to raise cash sometime before the end of 1Q14 to successfully ramp its first commercial isobutanol biorefinery at Luverne. That of course will dilute the existing share count, but if the company can easily attract investors to raise more money I'd consider that a win. If the company can get through 2014 without any major manufacturing setbacks and make progress on ramp-up, then it will be able to raise money on pretty attractive terms the next time around. Losses continue to pile up, although the gap will close once commercial operations are maintained at steady state. Right now engineers at Gevo are working on mastering the process of making isobutanol. The major parts are making and sterilizing the corn mash for feedstock, mastering the seed trains for growing yeast that are used in full-scale operations, mastering the fermentation, and then mastering the separation with their GIFT technology. They appear to be making excellent progress on all key areas while commissioning equipment at Luverne, which will be followed by start-up of commercial operations in late 2013 but more likely early 2014. Learning the ins and outs of their new process will aid in signing licensing deals with ethanol producers throughout the world, and in fact, the first LOI was signed in 3Q13 with a 150 mmgy ethanol facility in Canada. Obviously, more revenue would come from owning capacity and selling products directly to customers/partners/JVs, but licensing will make significant contributions to Gevo's top line as well. It would be nice to add more manufacturing capacity than Luvurne, but I don't think that's a priority of management right now, nor do I know where the funds for such a facility would come from. The company could form JVs with ethanol producers to become part-owners of existing facilities, rather than out license technology, but that's just speculation right now. Gevo remains a very risky investment. However, it could be worth staking a minor position in at current prices. If the company can rack up more successes than failures with manufacturing in 2014, which I think is entirely possible if not expected, then it's quite absurd to value it at $65 million. Luverne could be EBITDA positive in 2H14. What will the market have to say then?--Maxxwell
I published an article called GEVO: Not a One-Trick Pony. Google it and read it.
TMFBlackandGold conviction pickValuespreadsheet.com says sell at $4 P/E Valuation $4 DCF Valuation -$66 ROE Valuation $0
It's a gamble with this one. I believe the likelihood of success is far greater than failure though, so I rate Outperform. Gevo's recent Government contracts are a good sign.
In the next year? If this co gets the fermentation figured out to make the isobutanol, it will be a huge breakthrough. The demand and cost effectiveness for this product is huge.
Gevo has a poor initial IPO, now that first round of Isobutalene has been made, now critiqued, round 2 of production should start in the 2nd quarter, giving them back their share price, and growing from there. Lanxess will use this product as their feedstock for making Butyl rubber, as well as Coca-cola for "green" bottles. Once this fermentation suit (currently dropped in court= Gevo prevailed), I expect to see a buy out, or large gains
Solid business fundamentals. Only impediment to profitable business removed following injunction in favor of GEVO. Perhaps on the target of the likes of BP etc. for a takeover, as they look to expand their exposure to renewable energy, and more specifically, the valuable patents possessed by Gevo.
it's little creatures create energy without oxygen
It is seeking to turn agriculture waste into profitable fuels. A down-home biofuel company which which is immersed in its market, making market development easier.
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