On Jul 16, 2013, Zacks Investment Research upgraded Green Plains Renewable Energy, Inc. (GPRE - Snapshot Report) to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
The company reported earnings surprises in the last three out of four quarters with an impressive average beat of 299.8%. The long-term expected sales growth of Green Plains is poised at a promising 82.6%. Business diversification strategies, effective risk management and shrinking inventory will drive the company to post yet another strong earnings result in the upcoming quarter.
The plummeting domestic corn prices proved beneficial for Green Plains’ margins as it kept Brazilian imports at bay. Green Plains recently expanded its operations by entering into an agreement with Choice Ethanol Holdings, LLC, to acquire Choice Ethanol’s interests in an ethanol plant in Nebraska as well as an ethanol storage and loading facility, roughly 15 miles east of the plant. Given the steady improvement in industry dynamics, the acquisition looks well timed.
The encouraging market conditions also motivated Green Plains to ramp up its production capacity. It explains the company’s plans to increase capacity to 95% from 92% in the near term.
Furthermore, a flexible financial position will allow Green Plains to explore more options for future business growth. However, the company has to watch out for the recurring risk of market price volatiles.
Other Stocks to Consider
Other ethanol products and service providers presently performing well are Zacks Ranked #1 (Strong Buy) Ferrellgas Partners LP (FGP - Analyst Report) and Zacks Ranked #2 (Buy) REX American Resources Corporation as well as Renewable Energy Group, Inc. (REGI - Snapshot Report) .