Is Green Plains a Buy?
America boasts the world's largest ethanol production footprint in the world -- and it's not even close. The commodity is also mired in a prolonged slump. The last time ethanol prices topped $2 per gallon was December 2014. Before that, they hadn't dipped below $1.50 per gallon since June 2005. The average monthly price through the first five months of 2019 was only $1.15 per gallon.
There's a complicated set of factors influencing the price of the fuel additive, ranging from a swollen national inventory to near-zero prices of federal credits attached to each gallon of production. The consequences are far simpler, however: Ethanol producers such as Green Plains (NASDAQ: GPRE) are treading water and accumulating red ink. With shares trading at just half of book value, should investors consider the ethanol stock a buy?
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