1) Green Plains Inc. (NASDAQ:GPRE)
Average Upside Potential: 114.5%
Number of Hedge Fund Holders: 25
Green Plains Inc. (NASDAQ:GPRE) has grown to be a leading bio-refining company maximizing the potential of existing resources via fermentation and patented agribusiness technologies. The company’s focus on operating more efficiently and consistently, together with its proprietary technology deployments, supported driving the improved cash flow generation. Green Plains Inc. (NASDAQ:GPRE) continues to increase and diversify its customer base for high protein ingredients, both domestically and internationally.
The company’s focus is on improving its market share in the higher-value pet and international aquaculture markets, where it expects that its products have a performance edge and command a premium. Green Plains Inc. (NASDAQ:GPRE) delivered a production record of Ultra-high Protein in Q3 2024 as yields continue to improve and the company streamlines the operations of its MSC facilities. Notably, the global push for sustainable and renewable chemicals continues to create a healthy demand for bio-based alternatives to petrochemicals.
Companies looking to reduce their carbon footprint are expected to increasingly turn to corn-derived instead of fossil fuel-derived alternatives. While traditional ethanol production possesses low margins, specialty biochemicals, proteins, and renewable oils provide higher profitability. White Brook Capital Partners, an investment management firm, released its Q4 2024 investor letter. Here is what the fund said:
“Green Plains Inc. (NASDAQ:GPRE) – Green Plains was a disaster in 2024. We wrote about Green Plains travails during 2024 and activities since the last update don’t warrant another. In the end, the Biden administration was not a positive one for Ethanol producers between dragging their feet around establishing standards, not enforcing the laws on the books, and struggling to complete their mandated rule making within the same 365 days as the deadline or the date before the new standards were supposed to be implemented. Their preference for electric automobiles seemingly subsumed all other energy priorities, and ignored the world’s current condition. In the end, the Greet Model’s prescriptions which in their preliminary form betrayed ethanol producers and their expectations, came in as they should have; the Blenders Tax Credit which benefitted Chinese and Brazilian used oil salesmen gave way to the producers tax credit that benefits US farmers and ethanol producers, and the Inflation Reduction Act’s biofuel provisions are now being signalled as likely to be kept by the new administration along with a new push for 15% nationwide ethanol blend approval (delayed in the 8 states that applied for it until 2025 under Biden). In short, the turn in administration is a positive one for Ethanol and for Green Plains and the inflection in EBITDA and cash flow are on schedule for 2025. Additionally, Ancora Advisors remains as an activist investor in the Company, and we expect movement in the near term.”
While we acknowledge the potential of GPRE as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than GPRE but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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