An Energetic Stock

Good Morning.  No matter what your opinion on global warming and whether or not there is a man-made global crisis, there is money to be made in the renewable energy sector.

Today’s featured stock is Renewable Energy Group (NASDAQ – REGI - $9.27).  The stock is up over 40% on an average of 300,000 shares traded per day over the last three months.  The chart analysis, particularly EMA, remains very bullish in the short term.

Renewable Energy is a biodiesel producer.  The Company acquires feedstock and produces fuel.  The various feed stocks include inedible corn oil, used cooking oil, and inedible animal fat; and from virgin vegetable oils, such as soybean oil or canola oil.  It is also involved in the purchase and resale of biodiesel and raw material feed stocks acquired from third parties; and sale of glycerin, free fatty acids, and other co-products of the biodiesel production process.  Finally, the company offers various operational services to biodiesel production facilities and other clean-tech firms, and construction and general contractor services for biodiesel production plants.

REGI reported a profitable 4Q12 due to several growth initiatives and improving margins.  Additionally, the retroactive reinstatement of Blenders Tax Credit by the US government resulted in a net benefit of $58 million to REGI.  The Blenders Tax Credit, officially known as the Volumetric Ethanol Excise Tax Credit is a credit of $0.45 for every gallon of pure ethanol blended into gasoline.

We think these factors point to price target $12.00 by July 1.

Have a great day!

Disclosure: Goldman Small Cap Research analysts are neither long nor short these shares but may elect to purchase the stock within the next 48 hours.

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