From The Stock Masters
We’ve had our eye on this company since last year and ever since the Democrats got control of US Congress we’ve been preaching AVR left and right. On Friday Aventine Reweable Energy (AVR) reported Q4 profit more than doubled as the company offset higher corn costs with strong sales volume and pricing, their net income was $12.8M for the quarter and $54.9M for the full year 2006. Of course that announcement lead to JPMorgan analyst David Silver 
raising his rating on AVR shares to "Overweight," or "Buy," from "Neutral" this morning. Silver called the company’s share price "depressed," saying it undervalues the company based on earnings, cash flow and growth potential. The Stockmasters couldn’t agree more, with shares trading around $1.50 from its 52-week low, it doesn’t take an "expert" to appreciate the current sale price. JPMorgan expects corn costs to retreat from record highs, while ethanol prices should escalate along with increased demand for gasoline during the summer driving season. We’ve seen this a thousand times America, every summer, higher gas prices, so what do you think will happen with the ethanol players? BMO Capital Markets analyst Kenneth Zaslow kept an "Outperform" rating on the stock with a $23 price target. Today shares of Aventine are trading around $16.50. The Masters are concerned with how much ethanol AVR can create and hold, but their new 57 million gallon dry mill facility began grinding corn on December 31st and began full operations at nameplate capacity last month. This pre-funded expansion was completed at a cost of approximately $1.22 per gallon. Aventine has begun to make capital expenditures for their planned capacity expansions in Pekin, Illinois, Aurora, Nebraska and Mt. Vernon, Indiana. The price tag of buying up land and making these expansion plans happen came to $4.6M as of December. Once again proving AVR are the Children of the Corn. Read their press release here…
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