12 Best Ethanol Stocks to Buy According to Hedge Funds

1. Valero Energy Corporation (NYSE:VLO)

Number of Hedge Fund Investors: 52

Valero Energy Corporation (NYSE:VLO) is the Best Ethanol Stock. It is among the biggest independent refiners in the US. It runs 15 refineries in the US, Canada, and the UK, with a daily throughput capacity of 3.2 million barrels. The firm also has 12 ethanol plants with a combined capacity of 1.6 billion gallons per year, as well as a 50% investment in Diamond Green Diesel, which can create 1.2 billion gallons of renewable diesel annually.

Its financial performance has been under pressure due to the recent decline in refining margins and rising operating expenses. Nonetheless, through initiatives like the Sustainable Aviation Fuel program, the business is still committed to improving its renewable energy capabilities. The operating income of Valero Energy Corporation (NYSE:VLO)’s largest category, refining, decreased to $437 million in Q4 2024 from $1.6 billion the year before. However, renewable diesel was a standout, increasing its operating income from $84 million in Q4 2023 to $170 million, in part because of higher sales volumes and improved margins. The ethanol sector saw a dramatic decline, generating only $20 million in revenue as opposed to $190 million.

Valero Energy Corporation (NYSE:VLO) remains well-positioned for almost any market condition due to its high-quality refining assets and location, which allows for greater feedstock flexibility. The business has always had an advantage because of its more efficient system of 15 refineries, which enables it to turn lower-quality feedstock into a high-value output. It shifted to processing larger quantities of high-quality discounted domestic crude by replacing imported crude with local, building more light crude processing capacity, and investing in transportation infrastructure as domestic light crude discounts emerged.

Overall, VLO ranks first among the 12 Best Ethanol Stocks to Buy According to Hedge Funds. While we acknowledge the potential of ethanol companies, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than VLO but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.

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