Gevo Inc (NASDAQ: GEVO) is screaming for the top in the market this morning. However, many are wondering why. The company hasn’t issued any news via press release or SEC filing. So, what’s the deal with all of the excitement surrounding the stock? Here’s what’s going on:
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- Why Investors Are Excited About GEVO Stock
- The Future Is Bright for Clean Energy
- What Analysts Think About GEVO Stock
- Risks to Consider Before Buying GEVO Stock
- Final Thoughts
Why Investors Are Excited About GEVO Stock
As mentioned above, Gevo hasn’t issued any news this morning, or yesterday for that matter. However, this week is turning out to be an incredible one for the stock.
So, what’s going on?
Investors are excited about the company’s work to expand its capabilities. GEVO is a clean fuels company that uses proprietary technology to generate jet fuel and other fuels using renewable feedstock.
That’s big news considering the state of the climate change conversation.
Nonetheless, the company announced that it has optioned the right to purchase hundreds of acres of land for a new production facility. This is important as now is the time to ramp up production of the company’s clean fuels considering the current clean energy environment.
Afterall, demand is likely to fly soon, which will bode well for the companies that are ready for that bump in demand. GEVO is going to be one of those companies.
The Future Is Bright for Clean Energy
The recent Biden Presidential Election win is great news for the clean energy industry, and thus, great news for Gevo. Throughout the past several years, Biden has been a strong proponent of a conversation surrounding changing legislation to improve use of clean energy sources and phase out energy sources that result in heavy greenhouse gas burdens.
That means that solar, wind power, clean fuels, and other clean energy companies will benefit from his presidency.
In fact, Biden will likely put tax cuts in place, both for the companies that produce clean energy products and the consumers that use them. Moreover, I wouldn’t be surprised to see several government grants pop up with the goal of increasing manufacturing capabilities and improving technologies produced by those who work in the clean energy space.
All of this bodes well for Gevo.
What Analysts Think About GEVO Stock
According to TipRanks, analysts love GEVO stock. At the moment, there are two analysts covering the stock, both of which rate it a Buy.
The low price target on the stock is $3.50 per share, with a high price target of $5.00. However, it’s important to remember that these price targets are out of date and don’t take into account the recent news surrounding the option to purchase land, nor the likely benefits coming as a result of a Joe Biden presidency.
Risks to Consider Before Buying GEVO Stock
If you plan on investing in anything, you’ll have to be willing to accept risk. Ultimately, risk is just part of the game. When it comes to GEVO stock, some of the most significant risks to consider include:
- Highly Speculative. Those who invest in GEVO believe that there will be a fundamental change in how we see energy relatively soon. However, if the shift to clean energy doesn’t take place, Gevo won’t be quite as valuable as investors give the company credit for. While I believe clean energy will take off in the year ahead, nobody can tell the future and this is a very speculative play.
- Gevo Doesn’t Make Money. Sure, the company does generate revenue through the sale of its clean fuels, but it doesn’t generate enough. At this stage, the company is having to spend massive amounts of money on growth and that money is flying out faster than it’s coming in. If the company can’t get to profitability before it runs out of cash, it will likely look to raise funds through the sale of newly issued shares, diluting value for existing shareholders.
- Penny Stock Risks. GEVO is a penny stock. As such, it is riddled with volatility and uncertainty, which should be considered before making an investment.
While there are risks involved in any investment, and GEVO isn’t without its fair share, I see the stock as a compelling opportunity. With the energy landscape likely to change in a big way, and GEVO being the company that’s in the lead by far when it comes to clean fuels, the opportunity here is hard to ignore.