Would you believe it if I told you there was an ethanol company whose stock was trading at 52-week highs? One by one, the former stars of this show have been taken behind the barn and shot. Valero Energy
All the while, shares of Green Plains Renewable Energy
Well, 2008 was a disaster for Green Plains, as it was for pretty much everyone in the space. In October, the company tripled its operating capacity when it reverse-merged into privately held VBV, whose shareholders injected $60 million of equity into the combined company. They paid $10 per share for 6 million shares, whose value subsequently plummeted to around a buck each.
At the time, that investment didn't necessarily look like money well spent. But as 2009 has rolled along, things have really turned around. Green Plains, taking a page from The Andersons
By September, Green Plains was running at its full 480 million-gallon-per-year capacity. Third-quarter results were impressive, with operations generating $19.3 million in EBITDA. Following this release, shares have hurtled well past that $10-per-share price that the folks from VBV paid. They've suddenly started looking pretty savvy.
Even though Green Plains' management team has impressed me with its ability to dodge disaster in this very difficult space, I still wouldn't necessarily recommend purchasing a company in the ethanol space today.
Motley Fool CAPS players have a low opinion of Green Plains, despite its breathtaking share performance this year. In aggregate, they've awarded a stock a lowly one-star rating. Think they're missing something in this story? Sound off for yourself.