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Why Pacific Ethanol Stock Just Soared 14.5%

By Rich Smith - Jan 13, 2021 at 12:35PM

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What's in a name?

What happened

Shares of Pacific Ethanol ( ALTO 2.14% ) are rocking Wednesday, up 14.5% at 11:45 a.m. EST.

But wait: Did I get that name right?

Rising red stock arrow representing a stock going up drawn on a yellow background

Image source: Getty Images.

So what

This morning, Pacific Ethanol announced that effective yesterday, it has changed its corporate name to Alto Ingredients. Most financial data providers haven't clued into the switch just yet (or they're waiting until tomorrow, when the Nasdaq is supposed to officially change its reporting data), but investors still seem pretty excited about it already.  

As the now-renamed Alto explained, it chose the new name to represent a new focus on producing alcohol for products such as cleaning solutions and pharmaceuticals, as opposed to the company's previous, money-losing focus on producing ethanol as a fuel additive.

Now what

The company isn't getting out of the fuel business entirely, however. Alto says it will continue to process corn into high-protein feed, pet food, and renewable fuel as well.

It remains to be seen whether the new focus on sanitizers and disinfectants will produce enough profit to consistently offset losses from the legacy ethanol biz, but for the first time since late 2016, the company did manage to achieve back-to-back profits in the second and third quarters of 2020. Investors today seem to be betting it will do it again in the fourth quarter and beyond.

The company plans to change its Nasdaq ticker symbol to ALTO to match its new name on Feb. 1.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Stocks Mentioned

Alto Ingredients, Inc. Stock Quote
Alto Ingredients, Inc.
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