With all due respect, buying into the concept of ethanol at the extremely high cost of production is pretty silly.
May I suggest a much better play. Buy into a company that produces equipment for the ethanol business. And I don't mean fertilizers and seeds. I think those are a bad play too. The predictions on these stocks were built in weeks, months ago.
Ceco corporation (Ticker is CECE) makes oxidation equipment for the ethanol industry. Here's a link to a story this morning.
They just announced 6 new contracts. Word of note: Ceco gets most of it's orders toward the end of the year. This year they've already announced about 60 million in new orders. If you look at the market cap, it's pretty damn impressive. If they can get their profit margins up, this is explosive news and results. Anyway,
I appreciate the thoughts of this board on a different play because I think investing in high priced corn just doesn't work! The subsidies and a speech from Bush won't carry this very far in the long run.
By the way Ceco is the largest vertically integrated pollution control business in North America. So if you like pollution control right now, need I say more.
Good luck to all
Oh, does that mean that alll ADM is in is Biofuel? IMHO - That is less than 18% of last years business. This is a long term screaming buy and hold. The traders will ride this to $35 on Wednesday, then $36 on Thursday, $40 on Friday. Mark my words..... VAReelst8.
<< buying into the concept of ethanol at the extremely high cost of production is pretty silly >>
Therefore, it is advisable to invest in the equipment that will be utilized to produce the costly ethanol? You aren't one of Cramer's rodents are you? A rodent after some corn for itself?
I'm not sure I agree that this is the wrong play. These cost for the most part fixed. farming is only going to become robotic and with new yeast on the way the producers will be able to duoble capacity in the years to come. Right now with out being subsidized ethanol can be made for 2.70 a gallon. With LLP's and other tax shelters how much is oil subsidized. If you give the same shelters to ethanol it will as cost effective as oil. Just food for thought.