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Why Pacific Ethanol Stock Shot Higher Today

By Rich Smith – Nov 5, 2020 at 12:24PM

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The rapidly worsening coronavirus trends in the U.S. offer a plausible explanation for the share price surge.

What happened

Shares of Pacific Ethanol (ALTO -2.82%), which makes alcohol products for disinfectants, beverages, renewable fuels, and more, soared higher Thursday morning, trading up by 24% as of 12:19 p.m. EST. But there was no obvious reason for that sharp move.

So what

Nothing tied to the election seems like it would directly impact this company. (I suspect that at this point in the coronavirus pandemic, both political parties are in favor of hand sanitizer and disinfectant.) No analyst upgrades or price target hikes for the stock have hit the wires recently, either. The company's third-quarter report isn't due out until Monday  -- and based on management's preliminary estimates, when those numbers do arrive, it looks like Pacific Ethanol will deliver an earnings miss.

Woman dispenses hand sanitizer from a bottle

Image source: Getty Images.

Now what

Now, what are investors supposed to make of all that, in light of this sudden stock price surge? I can really only make one guess.

On Thursday morning, The Wall Street Journal reported that on Wednesday, 102,800 new diagnosed cases of COVID-19 were reported in the United States, setting another all-time daily high in the pandemic's spread. This suggests that -- politics aside, and regardless of how Pacific Ethanol's Q3 numbers end up looking -- the current high demand for the disinfectants and hand sanitizers people are using in their attempts to avoid contracting and spreading the coronavirus isn't going away any time soon.

That's good news for Pacific Ethanol's business, and offers a reason for its shares to be rising.  

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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