Yahoo Finance 11 Best Ethanol Stocks To Invest In Now
In this piece, we will take a look at the 11 best ethanol stocks to invest in now. If you want to skip our overview of ethanol and its potential to reduce emissions and maintain the performance edge enjoyed by fossil fuels, then you can take a look at the 5 Best Ethanol Stocks To Invest In Now.
Ethanol is an alcohol, meaning that it's made of just three elements namely Carbon, Hydrogen, and Oxygen. This provides it with the same natural ingredients as gasoline, and it also makes it suitable for a variety of industrial use cases such as cleaning, sanitation, and making other chemicals. Ethanol's mixture with gasoline is called gasohol and is available in everyday fuel stations.
Since ethanol is an alcohol, unlike gasoline which is an alkene, it is cleaner burning. This makes it suitable for green energy use cases, a reality that stock market investors are also aware of. As part of our coverage of 12 Most Promising Green Stocks According to Analysts, we took a look at which clean energy stocks hedge funds are investing in. This revealed that out of the 12 stocks that had the greatest number of hedge fund investors out of the 910 that were part of Insider Monkey's database as of September 2023 end, two were ethanol companies. These two ethanol stocks are REX American Resources Corporation (NYSE:REX) and Green Plains Inc. (NASDAQ:GPRE) and their latest share price upside percentage as of March 2024 is 22% and 69%, respectively.
Seems like analysts are quite optimistic when it comes to these two particular ethanol stocks, despite the shift to traditional energy companies in the wake of the Russian invasion of Ukraine. Ethanol also stands out from other green energy sources such as solar panels through the fact that it is able to blend in the supply chain of alkene fuels such as kerosene that is used in commercial turbine engines that power aircraft. This means that ethanol, and ethanol stocks, are also part of a broader category of fuels and equities called biofuels and biofuel stocks.
Just like we did with green stocks, we also took a look at which biofuel stocks hedge funds are buying as part of our coverage of 10 Best Biofuel Stocks To Buy Now. This particular analysis looked at how many hedge funds among the 910 that were covered by Insider Monkey's research in Q2 2023 had invested in biofuel companies. Out of these ten stocks, the majority, or six were involved either directly in making ethanol or working with it in the broader biofuel industry with some picks being Ecopetrol S.A. (NYSE:EC), Alto Ingredients, Inc. (NASDAQ:ALTO), and REX American Resources Corporation (NYSE:REX).
As part of our research for this piece, we also discovered that one of the biggest fans of ethanol is the U.S. Department of Energy. The Energy Department's analysis of data from the Agriculture Department shows that the U.S. can cut down gasoline use by as much as 30% by utilizing existing agricultural land. In January 2024, the DoE announced the opening of the world's first commercial ethanol-to-jet fuel facility in Soperton, Georgia. This plant is owned by the Georgia based biotechnology firm LanzaJet. The facility is expected to generate economic activity worth tens of millions of dollars over its lifetime, and it is part of a growing global trend towards Sustainable Aviation Fuels (SAFs) that could provide sizeable catalysts to ethanol stocks especially since the global air travel industry often faces some of the harshest criticism for carbon dioxide and other emissions.
Shifting gears to take a look at ethanol stock performance this year, since the ethanol industry isn't popular among the broader public, there are few exchange traded funds or ETFs that track these stocks. Yet, we can still focus on their broader performance as a category and individual share price movements forced by company specific catalysts by analyzing how the ethanol stocks that we've discussed so far in this piece have done in 2024. The five ethanol stocks that we've discussed so far are NASDAQ:GPRE, NYSE:REX, NYSE:EC, NYSE:FF, and NASDAQ:ALTO. Year to date, the share price performance of these top hedge fund ethanol stock picks has been -16.65%, -5.41%, -9.28%, 18.05%, and -25.28%.
This brief stock analysis provides a rather interesting set of results where four out of five ethanol stocks haven't really done well. However, if we look at their performance over the past twelve months, then three out of these five stocks are in the green, with REX American in particular having gained 45% during this time period.
One ethanol stock that's been down 34% over the year is Green Plains Inc. (NASDAQ:GPRE), and here's what White Brook Capital Partners had to say about the firm in its Q4 2023 investor letter:
Green Plains is a troubled investment. The stock did not perform as expected in 2023 and has had a difficult start to 2024. The Company continues to be well positioned, generating solid margins on each kernel of corn as the corn crush margin stays meaningfully positive. Furthermore, the industry’s progression is clear. There is an opportunity for ethanol producers to increase short and long term profitability by deriving higher amounts of corn oil, specialty alcohols, and high-density feed protein from each kernel of corn. It’s also increasingly clear that the required capital will prevent many current operators from transitioning. Green Plains was fortunate to begin its conversion relatively early and to have the scale necessary to complete the transition.
During the year, the regulatory environment bent towards ethanol producers as the federal government stopped preventing several midwestern states from blending a higher percentage of ethanol into gasoline and included their substrates in Inflation Reduction Act climate change subsidies.
Finally, the company is at the forefront of the ethanol industry’s sustainable aviation fuel (SAF) development, a future use case that would use a substantial portion of the US’ current ethanol production if today's ethanol plants were to supply it. This year's developments were positive for Green Plains and portend a dramatically higher earnings stream within a year, even higher in two and higher still in three, making the stock incredibly cheap, particularly looking two or three years out.
With these details, let's take a look at the best ethanol stocks to buy. Some notable names are Green Plains Inc. (NASDAQ:GPRE), Archer-Daniels-Midland Company (NYSE:ADM), and Valero Energy Corporation (NYSE:VLO).
Farmers harvesting corn in a field, reminding us of the importance of the company's ethanol production.
Our Methodology
To make our list of the best ethanol stocks to buy, we made a list of all publicly traded companies on U.S. exchanges that are either direct participants in, or related to, the ethanol industry. These firms were then ranked according to the number of hedge funds that had bought their shares in Q4 2023 and the top stocks were selected.
For these top ethanol stocks, we used hedge fund sentiment. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). That’s why we pay very close attention to this often-ignored indicator.
11 Best Ethanol Stocks To Invest In Now
11. Methanex Corporation (NASDAQ:MEOH)
Number of Q4 2023 Hedge Fund Shareholders: 15
Methanex Corporation (NASDAQ:MEOH) is a Canadian methanol company with operations all over the world. The firm has been doing well on the financial front as of late by having analyst EPS estimates in all four of its latest quarters.
As of Q4 2023 end, 15 among the 933 hedge funds tracked by Insider Monkey had piled into the firm's stock. Methanex Corporation (NASDAQ:MEOH)'s largest shareholder among these is David S. Winter and David J. Millstone's 40 North Management courtesy of its $93.9 million stake.
10. Aspen Technology, Inc. (NASDAQ:AZPN)
Number of Q4 2023 Hedge Fund Shareholders: 15
Aspen Technology, Inc. (NASDAQ:AZPN) is an American firm headquartered in Bedford, Massachusetts. It is a backend ethanol stock whose energy transformation software is used by ethanol companies. It scored a green energy win in February 2024 by teaming up with a firm to provide greater renewable energy coverage to European homes.
By the end of December 2023, 15 out of the 933 hedge funds covered by Insider Monkey had invested in Aspen Technology, Inc. (NASDAQ:AZPN). It joins Archer-Daniels-Midland Company (NYSE:ADM), Green Plains Inc. (NASDAQ:GPRE), and Valero Energy Corporation (NYSE:VLO) in our list of the best ethanol stocks.
9. Alto Ingredients, Inc. (NASDAQ:ALTO)
Number of Q4 2023 Hedge Fund Shareholders: 16
Alto Ingredients, Inc. (NASDAQ:ALTO) is a specialty alcohol company catering to the needs of the healthcare, pharma, and other industries. It also provides fuel grade ethanol. It made an important announcement for its Illinois ethanol plant in March 2024 by announcing a greater focus on carbon capture technologies at the site.
During Q4 2023, 16 out of the 933 hedge funds profiled by Insider Monkey had invested in Alto Ingredients, Inc. (NASDAQ:ALTO).
9. The Andersons, Inc. (NASDAQ:ANDE)
Number of Q4 2023 Hedge Fund Shareholders: 16
The Andersons, Inc. (NASDAQ:ANDE) is a diversified ethanol stock that trades the fuel and sells it for other purposes. It's one of the strongest rated ethanol stocks on our list, as the shares are rated Strong Buy on average.
As of December 2023 end, 16 out of the 933 hedge funds part of Insider Monkey's database had bought and owned the firm's shares. Noam Gottesman's GLG Partners was The Andersons, Inc. (NASDAQ:ANDE)'s biggest investor due to its $9.2 million stake.
8. REX American Resources Corporation (NYSE:REX)
Number of Q4 2023 Hedge Fund Shareholders: 17
REX American Resources Corporation (NYSE:REX) is an American chemicals company that produces and sells ethanol. It's one of the best performing ethanol stocks on our list, as the shares are up by 46% over the past year after strong performance in Q3 2023.
In the subsequent quarter, 17 out of the 933 hedge funds polled by Insider Monkey had held a stake in REX American Resources Corporation (NYSE:REX). Out of these, Jim Simons's Renaissance Technologies owned the biggest stake that was worth $41.9 million.
7. Comstock Resources, Inc. (NYSE:CRK)
Number of Q4 2023 Hedge Fund Shareholders: 18
Comstock Resources, Inc. (NYSE:CRK) is a biofuel company headquartered in Frisco, Texas. It is a rare firm that converts feedstock into ethanol suitable for automobile use. The shares are rated Buy on average, and the average analyst share price target is $9.67.
During 2023's fourth quarter, 18 out of the 933 hedge funds part of Insider Monkey's database were the firm's shareholders. Comstock Resources, Inc. (NYSE:CRK)'s largest hedge fund investor is Todd J. Kantor's Encompass Capital Advisors as it owns $31 million worth of shares.
Along with Archer-Daniels-Midland Company (NYSE:ADM), Green Plains Inc. (NASDAQ:GPRE), and Valero Energy Corporation (NYSE:VLO), Comstock Resources, Inc. (NYSE:CRK) is a top hedge fund ethanol stock pick.
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Disclosure. None. 11 Best Ethanol Stocks To Invest In Now was initially published on Insider Monkey.
