Replies to post #883 on REX American Resources (REX)

[value1008]

Petter, REX's CEO Rose stated that they are buying back shares at these depressed prices in lieu of making an external acquisition-- they are basically creating higher EPS by significantly taking down their sharecount relative to earnings. I would hope for a dividend now that all plant debt is paid off.....

I've been contemplating rebuying REX but the guidance for Q1 and Q2 is uncertain for investors with ethanol and oilprices so depressed. The good news is that DDGs prices are back up over $200/ton and natgas prices are super-low, and corn prices are still relatively low (not as low as for REX's Q3 period) so they are making back a portion of what they're losing on plunged ethanol prices.

I haven't examined closely all the numbers, but i surmise that in Q1 and Q2, given present prices for everything (and these could change), REX might be able to post around 1.85 to 2.05 EPS, but don't quote me on that!!

But everything i'm reading about crude oil glut here in USA and storage at Cushing likely maxed out in 10-12 weeks suggests to me that oilprices may crash at some point in next month or two, and that would have a terrible effect on gasoline prices and almost certainly drag down further the price of ethanol. One might be able to buy REX in the $40s at that point.

In the meantime, i'm looking for gains in the biotech sector and playing the volatility in certain commodities.

[catkin]

Hello Petter and Value,

I saw the PEIX massive run up today and regretted that I had not bought back min yet. Like Value, I hesitate because ethanol process and margins are still weak and oil low. I differ a bit from Value's read on oil. I am in the "we have bottomed" crowd, quite solidly so. The contango is what is filling up storage, as buyers buy and wait to sell it. If we were headed for an oil crash in wti, the futures would start to reflect that.
In addition, Cushing has room , as do the pipelines etc. so the dire we are running out of storage stuff is, in my opinion, wrong, and some of it deliberately intended to sway the market.
The trend long term is up, as demand increases annually, and supply gets squeezed due to cutbacks in capex , natural production declines . Even with tight oil productivity gains, we are talking a small amount of bpd global demands.
BaCK TO ethanol, rex, and peix. I am not back in yet, but of course wish I had bought peix in the 9's a few days ago. Now I am watching for a bit of the foam to clear off and may assess peix if it falls back some..Q1 will n ot be the same as q4 14 of course, as prices were weaker q1 overall. However, forward looking, I think positioning for q2 and 3 will be profitable as |I expect ethanol prices to follow gas prices up, and wti to stabalize around $60. All fwiw.
GL
Catkin