Aventine Renewable Energy's hope: The 2008 Presidential Election

Ethanol investors know the Aventine Renewable Energy Holdings, Inc. (Public, NYSE:AVR) sad story well. The IPO in 2006 showed amazing potential, but then shares of AVR fell to the $30's, then $20's, and today they barely register above $10. Since the summer of 06', shares are down more than 70% -- hopeful investors got burned. So is ethanol just a fad fuel, yesterday's news, and a lost investing opportunity? Think again Masters, the upcoming 2008 Presidential election, that's right, tree huggers are going to have a field day with alternative energy companies.

So why should AVR benefit, it's a loser stock? Friends, Aventine flies the red,white, and blue proudly, they're as American as apple pie. Aventine Renewable Energy Holdings Inc. (NYSE: AVR) is one of the biggest producers and marketers of ethanol in the United States. The company was established in 1981, giving it a marketing strength absent from many of its recently arriving competitors. Little goes to waste at Aventine: while its strength is ethanol, the company also produces and markets biodiesel and such byproducts as corn gluten feed and meal, distillers products, carbon dioxide and brewers’ yeast.  

With plants in its hometown of Pekin, Ill., and another in Aurora, Neb., the company’s annual production capacity is around 207 million gallons. Planning for another plant in Indiana, along the Ohio River, is under way, and will bring the eastern Corn Belt into the company’s domain in late 2008 or early 2009. God Bless America is what you're thinking huh? Paul Rolfes at SmallCapInvestor.com believes AVR isn't just a fad, they're the real deal in ethanol production.

Checked the price of gas lately, how about the price of crude oil? It's expensive, really expensive. Americans get in a conniption fit every year about soaring oil and gas prices, and now that we are on the verge of deciding the next President, it's a hot item. I love this quote from a great Associated Press article last month on the subject of ethanol and the 2008 election - "Do not expect to hear much talk about farming from the presidential candidates who regularly tour Iowa, which traditionally holds the earliest primary contest and is one of the country's premier agriculture states.

Instead, prepare for three words: I love ethanol."

There's no question it is going to be a great item of debate and I'm sure the corn thirsty candidates will be banging on Aventine's door and maybe even Mit Romney will make a guest appearance at their HQ. Candidates acknowledge their support of ethanol, but for environmental, economic and defense reasons rather than political expediency.

Romney has emphasized the benefit of ethanol for reducing dependence on foreign oil, and a Clinton spokeswoman cited the need to reverse course on global warming. Giuliani has said he supports continuation of the ethanol tax break, and Obama has noted that his home state of Illinois is second only to Iowa in corn and ethanol production.

It doesn't matter if you think AVR is a crap stock or not, ethanol is going to get attention in the coming months, the good kind of press. I'm betting with AVR shares trading so cheap, any good news will send the stock up a few points. It's down 70+% since the IPO, how much worse can it get? Politicians will put the real fuel to get ethanol companies' shares up, both the Democrats and Republicans. Ethanol investors, who cares who wins the Presidential election, they all will try to save face on Aventine's doorstep.

Article written by: Frank Lara Jr.
Article posted on: September 25th, 2007

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