Renewable energy company Gevo (NASDAQ:GEVO) is a power player in what might be called the “fuel for everyone” revolution. As the company offers reduced-footprint alternatives to conventional gasoline, jet fuel and diesel fuel, GEVO stock could add some power to your green-energy portfolio.
Is it possible for a company to single-handedly reduce the world’s carbon emissions from fuels to zero? Maybe or maybe not, but Gevo’s clearly not afraid to try.
Indeed, the company boldly claims that its products “perform as well or better than traditional fossil-based fuels in infrastructure and engines, but with substantially reduced greenhouse gas emissions.”
That’s an ambitious vision, but loyal GEVO investors expect nothing less from this forward-looking energy market disruptor. But informed investors must consider whether it makes sense to start a position in GEVO shares now. So, let’s begin with an analysis of the recent price action.
GEVO Stock at a Glance
One of the best features of GEVO stock is that it’s trading at a very affordable price point. This is good news for folks who might happen to have smaller-sized trading accounts.
Throughout 2020, the key level to watch for GEVO stock is $2. The bulls made a run for this level in June, and then again in August. More recently, the bulls gave it another shot in November.
They didn’t succeed in holding the stock above $2 those times. Keep in mind, though, that GEVO shares comfortably traded above $2 throughout most of 2018 and 2019.
Therefore, it’s possible for the GEVO stock bulls to stage a breakout in the near future. It will be essential for the next push to be on strong volume. That way, the move will have some conviction and participation, which can make it more sustainable.
A High-Octane Deal
Probably Gevo’s biggest moment of 2020 was the inking of a deal with mega-sized commodities dealer Trafigura. With over $171 billion in assets and more than $54 billion in revenues, Trafigura is a true giant among independent commodity trading specialists.
It was a major milestone, and Gevo’s biggest contract to date, when the company agreed to deliver a mind-boggling 25 million gallons per year of renewable hydrocarbons to Trafigura.
As Gevo CEO Patrick Gruber reported, the Trafigura deal brought his company “to over $1.5B of revenue in long term contracts when added to the other contracts we have in place.”
This massive deal should have long-term positive implications for GEVO stock owners as Gevo’s deliveries of renewable hydrocarbons to Trafigura are expected to commence in 2023.
Steady Financial Footing
Even while we’re keeping an eye on Gevo’s foray into the great wide world of clean energy, it’s also essential to take stock of the company’s capital position.
Fortunately, it appears that Gevo passes in this area. Granted, the onset of the novel coronavirus presented fiscal challenges to the company in 2020. Yet, the data suggests that its financials are on the rebound.
Impressively, Gevo ended its third fiscal quarter with cash and cash equivalents of $80.6 million. For reference, we can compare this result to the $6.3 million reported at the end of the prior quarter.
Not only that, but Gevo’s third-quarter reported earnings per share indicated a whopping 87.88% year-over-year improvement, while also beating Wall Street’s estimate.
Perhaps it shouldn’t be surprising, then, that GEVO stock shares surged 4.7% in after-market trading after those figures were released to the public. Obviously, investors liked what they saw and really, who could blame them?
For the long term, the outlook for GEVO stock is decidedly bullish. Just the Trafigura deal alone should provide Gevo with revenues for years.
Just because the stock is low-priced, doesn’t mean that the company’s not doing well financially. Sometimes solid companies can be traded affordably, and GEVO shares are an excellent example of this.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system — with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation.