Gevo (NASDAQ:GEVO) is up almost 35% in pre-market trading on Tuesday as America gets ready for pro-renewable energy President-elect Joe Biden to take office on Wednesday. Two Washington-related developments could be the reason why.
Among the advisors guiding the new White House policy will be Gevo co-founder and the first woman to be awarded the Nobel Prize in Chemistry, Frances Arnold, who was named co-chair of the President’s Council of Advisors on Science and Technology over the long weekend.
As well, on Jan. 15, the Department of Energy’s Office of Fossil Energy announced plans to make $160 million in federal funding available to help recalibrate the country’s broad fossil-fuel and power infrastructure for decarbonized energy and commodity production. That funding will be used to develop technologies for the production, transportation, storage and utilization of fossil-based hydrogen, with progress toward net-zero-carbon emissions.
Gevo develops bio-based alternatives to petroleum-based products via biotechnology and classical chemistry. The Colorado company converts renewable raw materials into isobutanol and renewable hydrocarbons that it says can be directly dropped into existing fuel and chemical products. It says that its three critical pieces of technology are key differentiators between it and other biofuel technology companies.
Analyst Rating Boosts GEVO Stock
Noble Capital Markets analyst Poe Fratt on Monday issued a “buy” rating on GEVO stock with a price target that — at least as of yesterday — implied 30% upside. To be sure, analyst coverage of the company is thin, as the only other research cited by Gevo comes from H.C. Wainwright’s Amit Dayal.
Fratt has made some excellent calls on the names in his coverage. In fact, he’s ranked No. 409 out of 7,233 analysts on TipRanks (No. 528 out of 15,123 overall experts). Meanwhile, Dayal is ranked No. 19 by the financial data site.
And, it’s worth mentioning that Fratt’s coverage is commissioned by the biofuels firm. There’s nothing inherently wrong with that. However, it is just not as common in the U.S. as it has become in Europe, where such research helps build awareness in the capital markets. As Nordics research provider Fogel & Partners advises clients, it “can also support the creation of a consensus on expectations, thus reducing the risk of surprises when communicating the results.”
What’s an investor to do here? Well, it’s not every day that a penny stock gets the sort of validation that GEVO stock is seeing today. Still, there’s a reason why penny stocks are cheap. They are volatile and often opaque. Some investors won’t touch penny stocks. Others trade or invest in these names exclusively. Investors who dabble in this arena must accept a higher degree of risk.
On the date of publication, Robert Lakin did not have (either directly or indirectly) any positions in the securities mentioned in this article.
InvestorPlace contributor Robert Lakin is a veteran financial writer and editor, following fintech, agtech and property tech startups.
