Historically speaking, renewable fuels haven't been a very good investment. Despite incredible overnight growth in the American ethanol and biodiesel industries in the last decade or so, hardly any pure-play renewable fuel stocks have managed to beat the S&P 500 in that span. The underlying businesses aren't entirely to blame (well, not always, at least) -- instead, there's simply too much uncertainty when it comes to federal tax credits. And since fuels are commodity-driven, low-margin products, most companies have become dependent on subsidies to deliver profitable results to shareholders.
That's exactly what makes the second-quarter 2018 earnings of Renewable Energy Group(NASDAQ:REGI) worth a closer look. The nation's largest biodiesel producer just turned in two consecutive quarters of profitable results, all without the help of federal tax credits, which lapsed at the end of 2017. While six months is not a very long time, the details strongly suggest that the company's recent performance is sustainable going forward. If that's the case, then this renewable energy stock might be one of the best bargains in today's expensive stock market.[A roll of $100 bills with a green bow.
By the numbers
To be fair to Renewable Energy Group, the business has a great track record of delivering growth, even though the stock price hasn't always reflected that. Management has always maintained that it was possible for the company to grow large enough and efficient enough to ensure that federal tax credits wouldn't dictate profitability. Wall Street dismissed that argument, because, well, this is a biodiesel company we're talking about.
For the complete article please visit
Motley Fool
ABOUT
Dynamic Wealth Research was founded on the principle the world is changing at an ever-increasing pace. The greatest profit opportunities an investor will ever find are from massive, sweeping changes. Dynamic Wealth Research analyzes and closely follows these changes, keeps its readers on the leading edge of them, and shows you how to be best positioned these anxious, interesting, and ultimately profitable times.
