We recently published a list of 12 Best Ethanol Stocks to Buy According to Hedge Funds. In this article, we are going to take a look at where Valero Energy Corporation (NYSE:VLO) stands against other best ethanol stocks to buy according to hedge funds.
Ethanol stocks are from companies that manufacture, sell, or distribute ethanol, a biofuel derived from crops such as corn and sugarcane. The ethanol industry is booming. As per Precedence Research, the global fuel ethanol market stood at $106.20 billion in 2024, climbed to $111.64 billion in 2025, and is anticipated to exceed $174.98 billion by 2034, representing a 5.12% CAGR between 2024 and 2034. The North American ethanol market is estimated to be worth $60.53 billion in 2024, growing at a CAGR of 5.20% over the forecast period.
Overall, the United States is the world’s leading producer and exporter of fuel ethanol, and prices in the country stayed relatively low in 2024. Moreover, Brazil is the second-largest producer and exporter. Growth Energy, the nation’s largest biofuel trade association, released data revealing that ethanol exports from the US set a new high in 2024. In total, the country exported 1.9 billion gallons of ethanol valued at $4.3 billion in 2024, breaking the previous record for volume set in 2018 and the prior record for value established in 2023.
Growth Energy CEO Emily Skor commented:
“The numbers don’t lie. The world is looking to the U.S. to meet its fuel needs and American producers are delivering in a way that supports economic growth abroad and at home in rural communities across the country,” “As the new Administration puts its new trade priorities into action, we look forward to working with President Trump and his team to ensure that we build on this momentum in a way that continues to grow the American farm economy through sales of American ethanol abroad.”
Recently, the U.S. Energy Information Administration reported on April 2 that the output of fuel ethanol in the US rose by 1% in the week ending March 28. Stocks of fuel ethanol were down 3%, whereas exports dropped 62%.
Most importantly, the export market remains the most attractive opportunity for driving US ethanol demand in 2025. Looking ahead, according to Jacqui Fatka, a farm supply and biofuels economist at CoBank, ethanol usage in higher-level blends is anticipated to surge annually in the US, but it accounts for just a tiny fraction of total ethanol demand due to the market’s size. Therefore, without large expenditures in infrastructure that allow retailers to adjust pumps or signage, nationwide E15 sales will not significantly increase in the time to come. Currently, the export market represents the best possibility to boost demand in 2025.
According to the United States Department of Agriculture’s most recent quarterly trade projection, announced on February 27, ethanol export volumes in the US would hit a record 1.85 billion gallons in the fiscal year 2025. The forecast is slightly higher than the previous quarter’s outlook.
Our Methodology
We sifted through online rankings to form an initial list of 20 Ethanol stocks. From the resultant dataset, we chose the top 12 stocks most favored by hedge funds, using Insider Monkey’s database of 1,009 hedge funds in Q4 2024 to gauge hedge fund sentiment for stocks. We have used the stock’s Market Cap as of April 3, 2025, as a tie-breaker in case two or more stocks have the same number of hedge funds invested.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Massive storage tanks filled with crude oil and diesel fuels at an oil refinery.
Valero Energy Corporation (NYSE:VLO)
Number of Hedge Fund Investors: 52
Valero Energy Corporation (NYSE:VLO) 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 1st on our list of 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.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.
