What happened

The rally by Gevo (NASDAQ:GEVO) stock continued today as the renewable energy specialist said that its co-founder Frances Arnold was named to President-elect Joe Biden's science team, a vote of confidence from the incoming administration for both Arnold and potentially Gevo.

Also, Noble Capital raised its price target on Gevo, adding to the bullish sentiment today. As of 11:12 a.m. EST, the stock had surged 55.5%.

Corn kernels

Image source: Getty Images.

So what

Gevo has a unique approach to renewable energy. The company takes crops like corn and transforms them into conventional fuel such as premium gasoline, jet fuel, and diesel fuel. Unlike the electric vehicle revolution, Gevo's technology has the potential to significantly reduce emissions in existing vehicles.

The announcement that Arnold will be a key member of the White House science team may also be stoking hopes that the administration could elevate Gevo's renewable energy solutions. Arnold will be a co-chairman of the President's Council of Advisors on Science and Technology.

In a press release, Gevo CEO Patrick Gruber said: "This appointment is well deserved. Gevo has benefited from Professor Arnold's outstanding work in developing enzymes crucial to our technology." Arnold has also won the Nobel Prize for chemistry.

Separately, Noble Capital lifted its price target on the stock from $5 to $8.25, and analyst Poe Fratt maintained his outperform rating. Fratt said he thinks an upcoming presentation at a Noble conference will highlight Gevo's "significant progress" around its Net-Zero 1 project in South Dakota, and said that the company's financial risk has moderated following earlier cash raises.

Now what 

Gevo's stock has exploded in recent weeks, one of several small-cap renewable energy plays that have caught fire since Biden won the presidency. In fact, the stock is up nearly 900% since then, boosted by the announcement of the South Dakota plant in December. 

Investors should be aware that Gevo is still essentially a clinical-stage company with only $5 million in revenue through the first three quarters. Still, the technology seems promising, and it can't hurt for the co-founder to have the president's ear. Keep an eye on progress at Net-Zero 1 as that should guide the stock's path over the next year.

  

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.