52 Week High - just the beginning

Steady Growth a HUGE positive for PEIX's future

Pacific Ethanol's stock chart shows more steady growth.

Today Pacific Ethanol hit a 52 week high and saw a close of over $20 for the first time since early 2012. But the best part about this stock is it's healthy growth chart. This stock has been wildly unpredictable in the past but since November of 2013 it's been the simplest 6 month chart to read I've seen (minus a fair market value adjustment for quarter 1 that saw a big swing).

What does this tell us about the stock? For all its unpredictability, since November it's mostly followed corn prices and ethanol prices. Corn has steadily gotten cheaper and Ethanol's demand has grown. It doesn't take a rocket scientist to recognize that if you pay less for your corn and the price you can sell your product at continues to improve, you're going to make more money on each gallon of Ethanol.

Today it was announced that corn production just had a record crop of 14,000,000,000 bushels. You can bet that the 3rd Quarter for Pacific Ethanol is going to be a blow-out. Especially since they've eaten up the additional start-up costs of the Madera plant in Q2 and Q3 is now humming at full steam.

I don't expect this chart to slow down anytime soon and in 6 months we should be looking at mid 30's for the stock price.

The crazy swings will likely not come back that we saw in late 2011. This has a lot to do with institutional investment increasing and many of the variables that could wildly affect the price of the stock have disappeared. The main ones are the debt that's been paid off, the idled plants that are now all at full capacity, the price of corn and uncertainty, and many other complications that the management has worked hard on to remove. We're watching a company stabilize right before our eyes and the chart reflects that. Expect more solid growth into the future!