Pacific Ethanol faces a fuel versus food debate.
Pacific Ethanol (NASDAQ: PEIX, Bullboard) has two strikes on it right now. One is that the cost of corn used to produce its core product is rising and there is a debate about whether biofuel companies should continue to get government incentives. The food versus fuel debate was made worse by the U.S. food CPI rising 0.9% last month, the most in 18 years.
PEIX has another issue. It has said it will release its Q1 numbers late. That usually does not make investors fell warm and fuzzy. If the results are good, it may not matter.
Stockholder concerns about the company are built into the price. The shares trade at $3.30, down from a 52-week high of $15.63. Bill Gates’ investment company recently cut its stake in the firm, but still owns almost 19%. The Microsoft (NASDAQ: MSFT, Bullboard) founder must still believe in "green".
It would be fair for Wall Street to be concerned about the fact that the company only made $2 million on revenue of $462 million last year.
This stock only moves up if corn prices move down. That may take awhile.
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