Alto Ingredients Inc (ALTO)

[Turkish_Master]

Ok, so we agree on the fact that they had a recent earnings reversal...and in the eyes of the investors that is what counts. This stock was trading in the mid .20's-.30's range prior to the positive growth, which tells us that it was already reflecting the negative financials of the past. The recent reversal has and will continue to reflect positively on the stock. I will outline the range in which this stock should be trading from a P/E perspective based on recent quarter results:

Current Stock Price: $ 0.69
Current P/E: $ 0.12
Current P/E Ratio: 5.75

Now let's consider hypothetical prices based on analyst/ investor preferences relating to P/E:

P/E just under 15: Low and Profitable

14.99*.12 = $ 1.798

P/E between 15 and 20: Good and Attractive

15*.12 = $ 1.80
20*.12 = $ 2.40

P/E over 20 but under 30: Acceptable

20.01*.12 = $ 2.4012
29.99*.12 = $ 3.5988

As we can see, the above stock prices reflect different levels of the ratio, but all are considered to be positive by the market. There are plenty of stocks that have much higher and less desirable P/E ratios, yet trade in the upper price ranges.

Considering the above analysis, we can generate a good idea of the range PEIX should be trading. Sooner or later the market will start reflecting that. It is also important to keep in mind that these figures will change as the company continues reporting its earnings in the upcoming quarters. The current positive outlook for the company in 2012 will only push the prices higher while maintaing an acceptable P/E ratio.