Ethanol Stocks Get Another Downgrade (AVR, PEIX, VSE)

September 20, 2007 by Douglas A. McIntyre

If you have been following our posts for 52-week lows at the end of the day, one of the groups that keeps having some of its components hitting this list is the ETHANOL Stocks.  With oil over $80.00 it will make you wonder.  This morning FBR Capital Markets, of Friedman, Billings, Ramsey has downgraded some of the ethanol stocks today:

Aventine Renewable Energy (NYSE:AVR) was cut to Underperform. Closed at $11.68; 52-week range $10.61 to $26.49.
Pacific Ethanol (NASDAQ:PEIX) was cut to Underperform. Closed at $11.17; 52-week range $10.29 to $19.80.
Verasun Energy (NYSE:VSE) was cut to Mkt Perform. Closed at $12.02; 52-week range $11.00 to $26.90.

This follows another sector downgrade from Soleil just on Monday September 17.  We have maintained that Ethanol in the manner the current system is set up is not all that economical and not as green on a net-net basis as it is intended to be, and this business got more crowded than it might have because of government subsidies.  This is also a political issue and 2008 may be another volatile year for ethanol.

Jon C. Ogg
September 20, 2007