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In this article, we’ll look at the 11 best ethanol stocks to invest in right now. If you would like to skip an overview of ethanol and its potential to reduce emissions and maintain the performance advantages enjoyed by fossil fuels, please see the following link: 5 Best Ethanol Stocks to Invest Now.
Ethanol is alcohol. That is, he is made of only three elements: carbon, hydrogen and oxygen. This gives it the same natural ingredients as gasoline and is also suitable for a variety of industrial uses such as cleaning, sanitary and other chemical production. The mixture of ethanol and gasoline is called gasohol and is available at everyday gas stations.
Because ethanol is an alcohol, it burns cleaner than gasoline, which is an alkene. This makes them suitable for green energy use cases, and stock market investors are also aware of this reality. As part of our list of the 12 most promising green stocks, according to analysts, we looked at which clean energy stocks hedge funds are investing in. This revealed that out of the 12 stocks, the number of hedge fund investors was the highest. At the end of September 2023, 2 of the 910 companies in Insider Monkey’s database were ethanol companies. These two ethanol stocks are REX American Resources Corporation (NYSE:REX) and Green Plains Inc. (NASDAQ:GPRE), with recent price increases of 22% and 69%, respectively, as of March 2024.
Despite the shift toward traditional energy companies in the wake of Russia’s invasion of Ukraine, analysts appear to be quite optimistic about these two particular ethanol stocks. Ethanol also stands out from other green energy sources such as solar panels due to the fact that it can be blended into the supply chain of alkene fuels such as kerosene used in commercial turbine engines that power aircraft. This means that ethanol and ethanol stocks are also part of a broader set of fuels and stocks called biofuels and biofuel stocks.
As with green stocks, we also looked at which biofuel stocks hedge funds are buying as part of our list of the 10 best biofuel stocks to buy right now. This particular analysis looked at the number of hedge funds that invested in biofuel companies out of 910 hedge funds surveyed by Insider Monkey in Q2 2023. Of these 10 stocks, the majority or six are directly involved in ethanol production or are involved in the broader biofuels industry, with several stocks including Ecopetrol SA (NYSE:EC), Alt. Ingrigent, Inc. (NASDAQ:ALTO), REX American Resources Corporation (NYSE:REX).
As part of our research for this article, we also discovered that one of ethanol’s biggest fans is the U.S. Department of Energy. A Department of Energy analysis of data from the Department of Agriculture shows that the United States could reduce gasoline use by up to 30% by utilizing existing agricultural land. In January 2024, the Department of Energy announced the opening of the world’s first commercial ethanol-to-jet fuel facility in Soperton, Georgia. The plant is owned by Georgia-based biotechnology company LanzaJet. The facility is expected to generate tens of millions of dollars worth of economic activity over its lifetime and will provide a significant catalyst for ethanol inventories, especially given its heavy use by the global air travel industry. It is part of a growing global trend towards sustainable aviation fuel (SAF). It faces the harshest criticism regarding carbon and other emissions.
Let’s take a look at how ethanol stocks have performed this year. Because the ethanol industry is unpopular with the general public, there are few exchange-traded funds or ETFs that track these stocks. Still, by analyzing how the ethanol stocks discussed so far in this article fared in 2024, we focus on their broader performance as a category and on individual stock price movements forced by company-specific catalysts. You can guess. So far we’ve covered NASDAQ:GPRE, NYSE:REX, NYSE:EC, NYSE:FF, and NASDAQ:ALTO. Year-to-date, the price performance of these top hedge funds for Ethanol stocks has been -16.65%, -5.41%, -9.28%, 18.05%, and -25.28%.
This simple inventory analysis provides a rather interesting set of results: 4 out of 5 ethanol stocks are actually not doing well. However, looking at their performance over the past 12 months, three of these five stocks are up, with REX American in particular up 45% over this period.
One ethanol stock that has fallen 34% for the year is Green Plains Inc. (NASDAQ:GPRE), which White Brook Capital Partners said in its Q4 2023 investor letter: ing.
Green Plains is a troubled investment. The company’s stock did not perform as expected in 2023, and 2024 also got off to a tough start. The company remains well-positioned as corn crushing margins remain significantly positive, generating solid margins per corn kernel. Additionally, the industry’s progress is clear. Ethanol producers have the opportunity to increase short- and long-term profitability by extracting larger amounts of corn oil, specialty alcohols, and dense feed proteins from each kernel of corn. It is also becoming increasingly clear that the required capital will prevent many incumbent operators from making the transition. Green Plains was fortunate to begin the transformation relatively early and have the scale necessary to complete the transformation.
That year, the federal government banned some Midwestern states from blending higher percentages of ethanol into gasoline and included those states’ substrates in climate change subsidies under the Inflation Control Act. The environment has tilted in favor of ethanol producers.
Finally, the company is at the forefront of sustainable aviation fuel (SAF) development for the ethanol industry, which, if supplied by current ethanol plants, would use a significant portion of the current ethanol production in the United States. This is an example of future use. This year’s developments are positive for Green Plains, with revenues likely to rise dramatically within a year, even higher in two years, and even higher in three years, especially looking ahead in the next two or three years. The stock price has become unbelievably cheap.
With these details in mind, let’s take a look at the best ethanol stocks to buy. Notable companies include Green Plains Inc. (NASDAQ:GPRE), Archer-Daniels-Midland Company (NYSE:ADM), and Valero Energy Corporation (NYSE:VLO).
Farmer harvesting corn in the field. A reminder of the importance of the company’s ethanol production.
our methodology
To create a list of the best ethanol stocks to buy, we created a list of all publicly traded companies on the US exchanges that are directly participating in or related to the ethanol industry. These companies were ranked based on the number of hedge funds that purchased their stock in the fourth quarter of 2023, and the top stocks were selected.
For these top ethanol stocks, we used hedge fund sentiment. The top 10 consensus stocks selected by hedge funds have outperformed the S&P 500 index by more than 140 percentage points over the past 10 years (Please see here for the detail). That’s why we pay close attention to this often ignored metric.
Best 11 Ethanol stocks to invest in now
11. Mesanex Corporation (NASDAQ:MEOH)
Number of hedge fund shareholders in Q4 2023: 15
Methanex Corporation (NASDAQ:MEOH) is a Canadian methanol company with operations around the world. The company has been performing well financially recently, with analyst EPS estimates released for each of the last four quarters.
As of the end of Q4 2023, 15 of the 933 hedge funds tracked by Insider Monkey had piled into the company’s stock. Of these, Methanex Corporation (NASDAQ:MEOH)’s largest shareholders are David S. Winter and David J. Millstone’s 40 North Management, with an offering of $93.9 million in stock.
10. Aspen Technology (NASDAQ:AZPN)
Number of hedge fund shareholders in Q4 2023: 15
Aspen Technology, Inc. (NASDAQ:AZPN) is an American company headquartered in Bedford, Massachusetts. This is a back-end ethanol inventory and its energy conversion software is used by ethanol companies. The company achieved a green energy victory in February 2024 by partnering with companies to bring more renewable energy to European homes.
By the end of December 2023, 15 of the 933 hedge funds covered by Insider Monkey had invested in Aspen Technology, Inc. (NASDAQ:AZPN). We join Archer Daniels Midland Company (NYSE:ADM), Green Plains Inc. (NASDAQ:GPRE), and Valero Energy Corporation (NYSE:VLO) on our list of best ethanol stocks .
9. Alto Ingrigent Inc. (NASDAQ:ALTO)
Number of hedge fund shareholders in Q4 2023: 16
Alto Elements, Inc. (NASDAQ:ALTO) is a specialty alcohol company serving the needs of the healthcare, pharmaceutical, and other industries. We also offer fuel grade ethanol. The company made a major announcement in March 2024, announcing an increased focus on carbon capture technology at its Illinois ethanol plant.
During the fourth quarter of 2023, 16 out of 933 hedge funds profiled by Insider Monkey invested in Alto Elements, Inc. (NASDAQ:ALTO).
9. Anderson’s Inc. (NASDAQ:ANDE)
Number of hedge fund shareholders in Q4 2023: 16
Anderson’s Inc. (NASDAQ:ANDE) is a diversified ethanol stock that trades fuels and sells them for other purposes. The stock has an average rating of “Strong Buy,” making it one of the strongest rated ethanol stocks on our list.
As of the end of December 2023, 16 of the 933 hedge funds registered in Insider Monkey’s database had purchased and owned shares in the company. Norm Gottsman’s GLG Partners was the largest investor in Anderson’s Inc. (NASDAQ:ANDE) with a stake worth $9.2 million.
8. REX American Resources Corporation (NYSE:REX)
Number of hedge fund shareholders in Q4 2023: 17
REX American Resources Corporation (NYSE:REX) is an American chemical company that produces and markets ethanol. The stock is up 46% over the past year on the back of strong Q3 2023 results, making it one of the best-performing ethanol stocks on our list.
Over the next quarter, 17 out of 933 hedge funds surveyed by Insider Monkey held shares in REX American Resources Corporation (NYSE:REX). Of these, Jim Simmons’ Renaissance Technologies held the largest stake, valued at $41.9 million.
7. Comstock Resources, Inc. (NYSE:CRK)
Number of hedge fund shareholders in Q4 2023: 18
Comstock Resources, Inc. (NYSE:CRK) is a biofuels company headquartered in Frisco, Texas. It is a rare company that converts raw materials into ethanol suitable for automotive applications. The stock has an average rating of “buy” and an average analyst price target of $9.67.
In the fourth quarter of 2023, 18 of the 933 hedge funds in Insider Monkey’s database were shareholders. Comstock Resources (NYSE:CRK)’s largest hedge fund investor is Todd J. Kanter’s Encompass Capital Advisors, with an ownership stake worth $31 million.
Comstock Resources, Inc. (NYSE:CRK), along with Archer Daniels Midland Company (NYSE:ADM), Green Plains Inc. (NASDAQ:GPRE), and Valero Energy Corporation (NYSE:VLO), is a Top hedge fund. Stock pick.
Click to continue reading 5 Best Ethanol Stocks to Invest Now.
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Disclosure. none. 11 ethanol stocks to invest in now Originally published on Insider Monkey.
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