Value Microcaps Junior Energy

[stock_peeker]

PEIX; now the peeps are saying it could go to $40? fugetaboudit!

It will continue to be volatile based on ethanol and corn prices. Keep in mind that the market likes to look 6 months ahead, and the market doesn't like uncertainty, so the all-important "spread" uncertainty is built into the price. IMHO it should be treated as a commodity stock (fluctuating with the spread on a day-to-day basis) and as an event stock nearer-term (based on optimism about Q1 profitability). There's also no assurance earnings will reach $4/sh this year as more warrants can be exercised throughout the year.

IMHO it is doubtful PEIX will drop back below $10 (but could with a narrowing spread), yet it seems totally outrageous to think it goes to $40 without 3-4 quarters of blowout earnings (due widening spread). Keep in mind that PEIX could eventually hedge a bit, reducing volatility thereafter, like REX and GPRE have done.

Disclosure: I am long PEIX stock with a target of about $20/share in April after Q1 earnings. I hold no options, as I've gotten caught being overly optimistic (particularly via call options) many times before.