Gevo Inc (NASDAQ: GEVO) has been an interesting stock to watch over the past several years. With a proprietary technology that gives the company the ability to convert carbon feedstock into clean-burning fuels, Gevo promises to have the fuel of the future. That has never been more apparent than it is today.
Recently, investors have been catching on, sending GEVO stock to levels it hasn’t seen since January, 2020. Nonetheless, the gains are likely far from over. Here are ten reasons why now is the time to jump in.
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Reason #1: Transportation Accounts for 28.2% of Us Greenhouse Gasses
According to the United States environmental protection agency, emissions from transportation account for a whopping 28.2% of the greenhouse gas emissions generated by the United States.
While electric vehicle manufacturers are hoping they have the answer, these only account for about 2% of vehicle sales. If you want to tackle US greenhouse gas emissions, you have to tackle traditional transportation.
GEVO fuels have been used in airplanes, boats, and other offroad vehicles for some time. Soon, I expect that the fuel will find its way to on-road use, providing consumers with a clean way to use traditional, fuel-burning vehicles.
Reason #2: Joe Biden’s Us Presidential Win Is Huge for Gevo
Recently, Joe Biden won the United States Presidential Election. That’s great news for GEVO and its investors. The fact of the matter is that over the past several years, Joe Biden has been very outspoken about his beliefs with regard to climate change and a need to shift toward clean energy.
With Joe Biden in office, Gevo, along with others in the clean energy space, will likely benefit from tax cuts and potential grants. Furthermore, consumers of clean energy products will likely get tax cuts as well, increasing demand for clean fuels like the fuels GEVO produces.
Reason #3: We’re Likely to See a Boom in Travel & Transportation
Due to the COVID-19 pandemic, consumers have been stuck at home. We’ve been told that every time we leave the house, we stand the chance of becoming infected with a deadly virus.
As a result, consumers are couped up.
Nonetheless, news surrounding COVID-19 vaccines seems to be hitting the tape every day. By early-to-mid next year, the vaccine may be available to the general public. This will result in a boom in travel and transportation, likely leading to an increase in the prices of traditional fuels along with increases in demand.
As this boom in transportation happens, GEVO will likely see an increase in demand for its fuels as well.
Reason #4: Gevo’s Agreement with Trafigura
In August of this year, GEVO announced that it entered into an agreement with Trafigura. The agreement surrounds the purchase of renewable hydrocarbons by Trafigura from Gevo.
This agreement is huge news.
The agreement locks ten years of revenue in for GEVO, collectively representing a contracted revenue backlog of about $1.5 billion with Trafigura, the biggest deal in the company’s history. Not only is this exciting from a revenue standpoint, the agreement serves to validate the fact that as the company expands production capacity, it’s clean fuels will be met with strong demand.
Reason #5: Activity in India
Also announced in August, GEVO entered into a Master Framework Agreement with Praj Industries Ltd, an Indian fuel company.
Under the terms of the agreement, the two companies will work on the infrastructure needed to provide renewable jet fuel and premium gasoline in India and neighboring countries. This agreement further validates the fact that Gevo’s fuels will be met with strong global demand.
Reason #6: Expansion on the Horizon
Gevo has been promising its investors that it has been working on expanding production capacity, and based on its most recent quarterly results, the company is executing well.
In fact, in late October, the company began to produce about 50,000 gallons of renewable isobutanol at its Luverne facility. Once the isobutanol is produce, the company plans on shipping it to its South Hampton Facility for use in the production of renewable hydrocarbons during the first quarter of 2021.
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The Bottom Line
The bottom line here is simple. Gevo has been working for several years to cement its spot as a leader in the production of clean fuels. Not only is the company executing on its plans to do so, now is a better time than ever for GEVO to shine.
With Joe Biden coming into office, an end to the COVID-19 pandemic in sight, and a world focused on reducing carbon emissions, GEVO is a stock that’s becoming incredibly hard to ignore.
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