While investors in corn-based ethanol companies may have done well early on, there hasn't been anything positive to say about the long-term for some time now. Take a look at the following charts from ethanol frontrunners Pacific Ethanol Inc (NASDAQ: PEIX) and VeraSun Energy Corporation (NYSE: VSE):
But the publicly traded cellulosic ethanol companies should prove to fair better. And not just production companies, but chemical companies as well.
In fact, cellulosic ethanol could create a $3 billion to $5 billion industry in enzymes and fermentation organisms, which help break down the tough bits of the plants into fuel.
Companies in the cellulosic sector include Verenium Corporation (NASDAQ: VRNM) and Bluefire Ethanol Fuels Inc. (OTC: BFRE). Both of those companies have received federal funding and should prove to be a good bet going forward.
It would also be wise to look at paper and pulp companies like Domtar Corp. (NYSE: UFS), that could start selling their byproducts as cellulosic ethanol feedstocks.
Until next time,
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