Editor's note: This article has been corrected to reflect that Xethanol previously traded on the OTC Bulletin Board. The names Aventine Renewable and Hawkeye Renewables have also been corrected. Finally, an article that was reported as having come from The New York Times actually came from The New York Post. We regret any confusion.

Want proof that some businesses are looking to exploit investor excitement for ethanol? Look no further than the company now referred to as Xethanol (AMEX:XNL). I recently wondered whether ethanol was worth the hype; though I noted that pursuing replacements for fossil fuels might be a worthy endeavor, finding an investment here that's worthy of Foolish investment principles could prove tricky.

More and more development-stage companies are going public to chase the growing ethanol craze. VeraSun (NYSE:VSE) offered shares to the public last week, and Xethanol changed its listing to the American Stock Exchange. Soon, Aventine Renewable and Hawkeye Renewables will also join the public markets.

While VeraSun was a straightforward IPO, Xethanol's listing was a bit more convoluted. You see, Xethanol moved its listing from the OTC Bulletin Board to the AMEX. At first glance, it almost looks like a new listing. It's not.

When it was founded in 1991, Xethanol was known as Zen Pottery Equipment. Since then, it's had enough name changes to make your head spin, including Freereal-Timequote.com (January 2000), LondonManhattan.com (September 2001), and the more recent Zen Acquisition Corporation. It settled on Xethanol Corporation through a reverse merger in February 2005, joining with a private firm called Xethanol that wanted to become public.

Starting to get a bit alarmed? From the aforementioned name changes, we can see that the company tried to exploit the dot-com boom right before its peak in March 2000. It then tried some type of venture to play on terrorist fears before seizing upon the current ethanol enthusiasm. Another red flag: The company reported minuscule sales of $4.3 million for all of 2005, with a net loss of $11.4 million and a loss of $6 million in operating cash flow.

A recent New York Post article aptly described Xethanol as "a shell company in search of an identity." Given the stock's current price, the Post piece calculated its market cap at roughly $260 million (which is close to the figure listed on the company's website). I don't know about you, but 60 times sales is a bit rich for my blood -- and it doesn't even price in any of the stock's apparently significant downside risk.

It's easy to blame management for appearing to pursue a get-rich-quick scheme, playing off investors' appetite for all things ethanol. But in all fairness, it's also an investor's duty to scrutinize a company's financials and business plan before buying shares. Sure, it's fine to gamble every now and then, but given Xethanol's tumultuous past, you might have more fun and better odds by heading to Las Vegas.

Anything can happen in the investing world. Maybe Xethanol will reach its gold at the end of the rainbow and become a successful ethanol producer. But as it stands right now, Fools might be better off investing their hard-earned money in less speculative endeavors. If you must tread in the ethanol space, at least check out the largest current ethanol producer, agribusiness giant Archer Daniels Midland (NYSE:ADM).

Fool contributor Ryan Fuhrmann has no financial interest in any company mentioned Feel free to email him with feedback or to discuss any companies mentioned further. The Fool has an ironclad disclosure policy.