Pacific Ethanol Quarter 2 earnings reports

Earnings were released last night and it's amazing to me still how many people are trading on headlines and not digging into the data.

As suspected, the data was fantastic. But what's comical is the initial headline of PEIX misses analyst's estimates by 6 cents. This company is hilariously under-covered by analysts and they pulled out some random analyst that dart-boarded a number for PEIX (and actually got pretty close) but since it was a slight miss, they're being heavily penalized.

Right now the stock is starting to rebound as the investors are digging in and seeing the fundamentals of the company are incredibly strong. Watch today and the next week to see it break through the $19 range and hopefully into the $20's in the next month.

Earnings post today after hours - PEIX

Today is the moment of truth for PEIX. And it shows all over the stock. The price is swinging wildly as people who have been holding are getting scared and selling, stock shorters are trying to cover and the rest of us are tired of the "keep waiting" attitude.

Yesterday's Seeking Alpha article was fantastic in explaining the future of this stock and what levels its price should be at over the next year. The question on all of our minds is "How quick will it get there?"

When will PEIX become a $30 stock? It could be as soon as tomorrow, although, if it hits that it'll likely drop back down as that's a target I believe many of the traders have of where they'd like to sell.

Pacific Ethanol will likely jump to $25 once the market opens and then I think it'll come back to $20 after a bunch of sells with people taking profits. Then over the next week, I think it will quickly climb up to the $30 range. In 3 months, look for it to get around $40. It will close the gap with GPRE and both should enjoy this stock price through next year.

Let the fun begin! Get in now if you haven't yet. Don't make the mistake of thinking it's already done all it's run up. The big run is coming. It's coming starting tomorrow.

Great PEIX stock price on Seaking Alpha

Fantastic article on the future of this stock. Somewhere in the $30's!

http://seekingalpha.com/article/2354415-value-gaps-of-all-value-gaps-a-tale-of-2-ethanol-companies

Enjoy!
Nick

PEIX Options - why you should watch them

PEIX Options can be a Good Indicator of Investor Stock Price Sentiment

Even if you know nothing about stock options, you should watch them. They are a very good indicator of where people expect the price to go to and can be a good tool to understand the real sentiment of a stock versus what you may see on the message board from people "pumping" or "bashing" a stock for their own gains. For example, you can see 1843 contracts are still open (open interest) for the $21 option chain. Each contract represents the ability to purchase 100 shares at $21 before August 16th. That's a total of potentially 184,300 shares. The average price people have paid to buy those rights is hard to tell exactly, but the majority look to have been purchased at $0.55 per share. That's roughly $101,000 spent from investors to buy the rights to sell the stock at $21. That means if it never hits $21, there will be a lot of investors who will be out a total of $101k. 

What I really like about Options is it's not opinion with nothing behind it. It's putting your money where your mouth is. 101k is on the line for those people who think the stock price will go above $21 before August 16th. What else I like is you can see the volume on Options. There are some PRETTY BIG investors buying thousands of contracts at 21 at a time. That means there are some "big boys" who see where this stock is going and plan to cash in HUGE. For $21 to make sense, the stock price needs to really be above $21.55 for them to even break even. This is because they paid 55 cents a share just to buy the option, so to make money on them, they need to be able to sell them for more. I like to sell options for at least $4 to $5 more. So this tells us there are a LOT of people who were willing to put there money where there mouth is and say $21/share will hit soon and even higher. So much so, they're staking $101,000. Now that's some useful information to watch. Much better than these message boarder's who post non-sense all day long. (I'm looking at you, Ray on Yahoo's board).

Nick

When Will Quarter 2 Earnings for Pacific Ethanol (PEIX) come out?

What E*Trade estimates...is wrong.

PEIX Q2 Earnings Release

Day over day, E*Trade updates their estimated earnings release date. Initially they had it as July 21st, then that passed and they moved it to the next day, then the next. Each day now they're saying earnings are coming in after hours today. This is false.

This is also another good example of bad information influencing traders.

So when will Pacific Ethanol's Quarter 2 report be released?

Pacific Ethanol always puts out a press release a few days prior to earnings and will do the same this time as well. Expect the press release to come any day now and earnings to show up around August 7th. This date is an interesting one for many reasons.

The major reason this date is interesting is for the Options traders (you can type "traders" all with your left hand...). The nearest options chains expire/exercise August 16th. That only gives about six trading days for the stock to run up and for options traders to make a good profit. This is why options traders right now are watching this stock very closely. It's better for options traders if earnings come out earlier rather than later as they'll have a much better chance for the option to come into the money (where the stock price is higher than the option's strike price). I personally have options out on this stock for $20 and $21. Initially, I was hoping for an earlier release date to give time for those options to run up. Now, the options traders will need to be on their game. See my next post as to why you should be watching the options chains.

Nick

Pacific Ethanol - PEIX earnings report is due next week. Moment of truth!

Pacific Ethanol (PEIX) earnings report is due next week. 

This is the MOMENT OF TRUTH!

From here forward the stock price for Pacific Ethanol will likely not look back and be at these levels for years to come. If earnings come out Monday morning July 21st this stock should see a nice bump in price.

But what's happening now and how high is it likely to go? With PEIX likely to hit 1 billion in revenue thanks to incredible circumstances of low corn prices, high ethanol prices, and excellent internal metrics in place to reap large profits, the stock is seriously undervalued. But the value of the stock is not the only factor of where the price will go.

"Why is that," you may ask? The sentiment of the stock has changed dramatically since the last earnings report fiasco. To catch those who aren't aware of the circumstances last quarter, here's what happened.

Pacific Ethanol was doing everything right and also reaping the benefit from a very good corn crop and favorable prices on Ethanol. They paid off debt which saved them millions, re-opened their final Madera plant which added 20 million in production. More recently they were added to the Russell 2000, 3000, and Global indexes, have seen institutional investment skyrocket, added Wet Distiller's Grain as a bi-product they sell, as well as many other positives which all have caused the stock price to spike from Q4 to Q1 earlier this year.

But that's not the whole story. Pacific Ethanol had quite a few warrants outstanding which are just shares they have promised to sell based on a set price. Whenever a stock price jumps significantly GAAP accounting principles require what's known as a Fair Market Value adjustment to be made to these outstanding warrants. Since the price of the stock jumped so much (over $10 per share) Pacific Ethanol had to show a loss of over $10 per share for each share. This is what's known as a non-cash expense. And it doesn't at all tell the whole story as there was no money lost. Quite the contrary, their accounts had never been fuller. But due to this GAAP accounting principle, the Earnings Per Share (EPS) were made to look like a HUGE loss had occurred instead of the giant gain they had seen. The stock tumbled from the mid 15's to the 10 dollar range on the initial reports due to most investors only looking at the EPS reports of a huge loss and not looking deeper into the financials to see that this was the best quarter they've posted in 5 plus years.

Fast forward to today. This quarter has been as good or better than the last, however, we do not have a fair market adjustment that will significantly hit the books as the stock price was relatively the same at the end of
Q2 as it was for Q1. This means the turn around should be gigantic from what we saw last quarter.

But this doesn't answer where we're going. Their is more to consider. Since the stock price collapse after Q1 earnings, people have been educated on the warrants issue and the non-cash expense and now understand this was not the whole story with the company. Due to this education, the stock price has rebounded and is threatening its 52 week high. 

The question is, have enough investors figured out the truth about the stock and has that already baked into the current price, OR are people still in the "wait and see" mode and want to make sure earnings are as predicted before they buy in for the ride up to $40 per share.

Certainly, the word has spread - the loss from last quarter was not an accurate depiction of the company's success recently. But has this message spread to most of the stock holders or just a few well informed ones? If it's most of the people, then we may not see a giant rise on the earnings next week as they've already bought on the knowledge. I however, suspect it's more likely we will see a large rise in the price. I think we're likely to hit a price as high as $30. I think the $25 to $30 range next week is not out of the question.

I'm honestly hoping for a lot more. This next week will be one of the most interesting weeks for this company since Bill Gates was one of the early investors.

Nick

Pacific Ethanol JUMPS 8.29% on zero news - Why you ask? (PEIX)

PEIX for July 14th, 2014

Well, today we see another HUGE jump prior to Quarter 2 earnings coming out on July 21st, 2014.

What happened today for Pacific Ethanol? Why the big jump for Peix?

Likely what we're seeing is two fold.

1. Traders are getting in before the BIG jump up that's set to occur on the 21st when the quarter one earnings report comes out.

2. July 19th is the Options strike date for this month and the last day to trade the option and cover your sell options is Friday, so there may be some attempt to drive up this price so people can cover their sells.

Likely though, most of this action is due to #1. The average trade volume was closer to 500,000 for the last 10 days and now that we're a week away from earnings expect to see heavy trading like today. Today's volume was four times more than the average. That's a LOT of people trying to get in before the earnings report because the smart money is on this stock going way up.

What is PEIX worth? Where is the stock going in the near and long term?

Short-term, expect PEIX to jump to the $25 to $30 range in the couple of days after earnings report on the 21st. Then we expect to see a pull back going as low as the $20 range due to most people taking their earnings.

Once it stops the bleeding in the low 20's range, people will buy back in and Pacific Ethanol should be to $40 stock price range in 4 to 6 months.

I'll be selling somewhere around $30 and buying back in at $20, then selling again at $40.

Pacific Ethanol's early rise and dips - PEIX

It seems like a trend that every morning Pacific Ethanol is rising sharply, then falling, often times to level off for the rest of the trading day. Here are some of my thoughts on what may be causing this. Our expert writer will also weigh in on this one likely later.

Now that the institutional investors are in this stock, the fund manager's job is to get a decent return. So often times on an early price spike, they'll sell and take their profits. They're happy to take a 1 or 2% gain first thing in the AM. This often pushes the price lower and they can hop right back in on the dip, and likely do.

Then they repeat this the next day.

PEIX - What's happening with Pacific Ethanol stock today

Disclaimer - As always, this is just my opinion on a stock.

Likely what is happening today is we are seeing the traders who were planning on dumping at $16 getting scared. These are the retail investors who don't understand that in a couple of weeks this stock is likely to have the single biggest stock jump it's seen this year.

As trading opened today, I think many of the people hoping to sell and get out at $16 saw the stock started tumbling (for no good reason btw) and decided they better take what they could get before it dropped to nothing.

What they don't realize are all the positives working towards a $30 stock price and are going purely on charts and not company data.

Here's a short list of some items to keep in mind:

1. Q2 Earnings report comes out at the end of July. Unlike the prior earnings report that appeared to be a loss due to a "non-cash" adjustment of outstanding warrants, this earnings report will not show that (fake) loss that scared so many away.
2. Madera plant has now been open and in full swing for the WHOLE quarter. 
3. Corn prices continue to be favorable.
4. Pacific Ethanol continues to pay down and refinance other debt into better terms, saving millions in interest. 
5. Based on other indicators like PE Ratio, etc, this stock price belongs in the $30 range and is very undervalued.
6. PEIX was added to many of the Russell indexes. This means any fund that uses those Russell indexes will require owning a percentage of this in their portfolio.
7. Institutional investors continue to gobble up more and more market share of Pacific Ethanol.

There are absolutely zero reasons why this stock would go down right now, so days like today tell me one of two things:

1. I don't know something I should know.

2. Or, people don't know some things they should know (listed above).

Hopefully this will help clear some of that up.