Gevo Inc (NASDAQ: GEVO) is a stock that I’ve been talking about for years now. However, with recent declines, many are wondering if there’s still an opportunity here. In my view, the answer is a resounding, “YES!”
In fact, I believe that the recent declines in the stock create a compelling opportunity. Here’s why:
Clean Energy Is Going To Be Massive Business
For those who haven’t been following Gevo, the company is a clean-energy company with a core focus on the transportation industry. While others in the field are working on electric vehicles and solar panels, Gevo’s focused on the creation of renewable fuels.
In fact, over the years, the company has developed a technology to turn renewable feedstock like waste wood and waste crops, into isobutanol. That isobutanol is then converted into clean-burning, sustainable aviation fuel as well as other fuels to power transportation in the United States and around the world.
That’s great news considering the direction the transportation and energy industries are headed.
The fact of the matter is that the world is looking for clean alternatives to the burning of fossil fuels. While electric vehicles may provide a consumer transportation solution in big cities, there are some big holes in the EV plan.
First off, to my knowledge, there are no electric engines strong enough to move a commercial aircraft from one state to another. So, there are areas electric engines simply won’t be able to address. Moreover, electric vehicles don’t make sense in rural areas with no charging stations or for consumers that travel long distances, due to the time it takes to charge these vehicles. At the same time, there is a massive percentage of the population that relies on low-cost used vehicles. This portion of the population simply couldn’t afford to purchase an electric vehicle as the market sits right now.
Gevo’s renewable fuels have the potential to solve all of these problems. Not only have these fuels been used in commercial flights already, showing the value and reliability of the company’s sustainable aviation fuel, Gevo’s sustainable fuels can also be used in various engines. As such, I’m expecting that in time, it will create a fuel for consumer vehicles that will be met with high demand.
Gevo Jumps On Renewable Natural Gas
As if sustainable transportation-focused fuels weren’t enough to cause excitement, the company recently announced that it will be moving forward with a renewable natural gas project in Northwest Iowa, after closing a $68,155,000 “Green Bond” private activity bonds offering.
Through the bond offering, Gevo has the funding it needs to get the ball rolling with this project, which could also be a major win for the company.
The project centers around generating renewable natural gas from dairy cow manure. This manure will be provided by three dairy farms in Northwest Iowa, which between the three, have more than 20,000 milking cows.
Once the project is fully operational, it is expected to generate about 355,000 MMBtu of renewable natural gas every year. Moreover, the company is working with a major renewable natural gas dispenser to finalize an agreement to sell the end product in the California Market.
In a statement, Dr. Patrick R. Gruber, CEO at GEVO, had the following to offer:
The RNG Project is expected to serve as an important component of Gevo’s Net-Zero strategy, and I want to thank President and Chief Operating Officer Chris Ryan and his team for their hard work and commitment that allowed us to accomplish this goal, and to Chief Financial Officer Lynn Smull and his team, and to Citigroup, for getting the debt deal done. We have a good team that has shown they can develop and finance RNG projects. We expect to use these capabilities going forward to develop additional RNG projects.
We are also pleased that our dairy partners will reap benefits from the RNG Project given that the manure digesters should improve the farms’ sustainability and lay the groundwork for more efficient recycling of nutrients and better soil health.
The Bottom Line
The bottom line here is simple. The world is making a push to green energy, and considering the current leadership in Washington DC, clean energy companies are likely to benefit quite a bit.
While there are plenty of companies focused on the production of solar, wind, and other renewable energy resources, few are focused on generating sustainable fuels. In fact, GEVO is further along than any other company.
Ultimately sustainable fuels are going to be a major factor in the world going green, and GEVO is at the forefront of that opportunity, making the stock well worth your attention.