In the grand scheme of things, the proverbial planets are lining up for Gevo, Inc. (NASDAQ:GEVO). It just (mostly) won a key patent infringement suit (as the defendant), and it managed to cut costs more than expected last quarter. All things considered, today's 10% pop makes a little sense.
It's not quite a reason to step into GEVO yet, however.
Gevo, Inc. isn't exactly a household name. But, within the right circles, the $88 million biofeuls company is relatively well-known. It makes ethanol technologies, and ultimately aims to make isobutanol... a chemical used in abundance by the energy-liquids industry. The end-goal is using its technology to replace petrochemicals by using isobutanol as the building block for alternatives to fossil fuels. It can do so by providing retrofits to existing ethanol plants, who will then use Gevo's cullulosic biomass fermentation technology to create ethanol.
That's the complicated way of saying Gevo Inc. has built a better mousetrap, as the inputs (corn, in this case) for its ethanol production are 100% renewable. The product of the process can be used to make solvents, coatings, plastics, fibers, jet fuel, and other specialty fuels. It can also be blended with gasoline.
That endzone is within reach, too. The technology works; and has been installed at an existing plant in Minnesota. That plant is shuttered right now, but is expected to reopen later this year.
The location of that plant is no minor detail for GEVO owners either. The state of Minnesota is currently mulling a law that would expand the definition of 'biofeuls' approved for blending with gasoline to include isobutanol. As of the last look, the proposal is still up in the air. Still, the fact that it's being considered at all is a small step forward for Gevo Inc.
All of that being said, the upside for investors hasn't been fully unleashed yet. It will most likely take a move above the $2.50 area to really get the ball rolling. Problem is, today's early jump left behind a gap that the sellers are already looking to fill. GEVO will likely need to go back and trade at a low of $2.11 (or lower) to fill that gap, and then begin that crawl back above $2.50. However, given that this is the second bullish wave we've seen in three months, the bulls have let the proverbial cat out of the bag - they're looking for reasons to buy, and finding more and more of them. One or two more should do the trick. Eventually, they'll take the stock over the hump.
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