Stocks That Almost Made the Cut: April 2006

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April 4, 2006 | S.T.A.M.T.C | | Author Asif

Given the high level of interest in alternative energy and specifically ethanol, I started looking into companies that produce ethanol or help in the process of producing ethanol. When you buy gasoline there is a good chance that you are buying a mixture that contains at least 10% ethanol. Another version, which uses 85% ethanol with just 15% gas is called E85 and is widely used in Brazil. As part of its “Go Yellow” campaign, General Motors (GM) also has a line of cars, trucks and SUVs that run on E85. Ethanol is most commonly produced using corn but could be produced using other waste biomass such as grass. Converting grass to ethanol is currently a long and challenging process. A micro-cap company called Dyadic International (DIL) engineers enzymes that help convert biomass into ethanol. SmartMoney featured this company in a story titled Children Of the Corn and the stock shot up more than 50% in a period of less than 2 weeks. Given the underlying fundamentals of the stock, its rapid ascent and lack of additional information, I decided to put the stock on my watch list instead of featuring it in this month’s SINLetter.

Another stock I considered was Dean Foods (DF), the company that is well known for its regular and organic products such as Horizon Organic milk, Silk soymilk, Mountain High yogurt and Berkeley Farms dairy products. The reasons I decided not to pick Dean Foods are covered in the April 2006 edition of SINLetter.




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