PEIX really shook people out...
Pacific Ethanol (PEIX)
We’ll start with a diversified company, with production lines in food products and animal feeds as well as industrial alcohols and renewable fuels. Pacific Ethanol sells its products on the global market, and has seen major gains in 2Q20. Even with recent losses in account, the stock is up a whopping 795% this year.
The gains have come since July, as the company expanded production in response to demand for sanitizing alcohols. Sales of alcohol for hand sanitizers has been a major boost for the Pacific Ethanol in the wake of the coronavirus crisis. Taking new production and sales potential into account, the company has revised 2020 earnings estimates upward to the $66 million to $86 million range.
So far, the company is on track. Like many small-cap manufacturers, Pacific Ethanol was running earnings deficits prior to this year – but COVID-19 changed that. Earnings turned positive in Q2 and remained so in Q3. The sudden shift has investors bullish on the stock.
Amit Dayal, 5-star analyst with H.C. Wainwright, sees plenty of reason for an upbeat outlook here.
“Investors should note that management indicated that though the company has a firm visibility on pricing, specialty alcohol volumes delivered to customers could vary on a quarterly basis. Given that sanitizers are a key end-market for specialty alcohols, the stock has come under some pressure with positive COVID-19 vaccine related news. However, we believe demand for sanitizer products should remain elevated with increase in any economic activity in the near term. We believe the improved balance sheet and cash flow is allowing the company to make investments in areas of the business that have been previously overlooked, and may have been under-contributing as a result,” Dayal opined.
In-line with these comments, Dayal rates this stock a Buy along with a $16 price target. This figure suggests an impressive 174% upside potential in the coming year. (To watch Dayal’s track record,
click here)
All three of the recent reviews on PEIX are positive, making the consensus rating a unanimous Strong Buy.
PEIX shares are priced at $5.82 and have been growing fast in 2H20, but the Street expects to see more growth here; the average price target is $16.50, implying 183% growth ahead for Pacific Ethanol.