As energy prices have risen, investors are taking a closer look at different types of alternative energy. Of course, many people are switching to renewable energy sources like wind and solar. They grab a lot of headlines. Although the biofuel stocks below are also worth considering.
With fewer people interested in biofuels, this could represent a better investment opportunity. And there is a lot of progress in this industry. In addition, the government continues to push for biofuels.
To begin, let’s look at the biofuel industry as a whole. Next, we’ll dive into some of the best biofuel companies to invest in. You’ll find company highlights that helped these stocks make this list…
Investments in biofuels
With renewable raw materials such as sugar crops, we can produce biofuels. Two of the most common these are ethanol and biodiesel. As a result, the energy source is more sustainable than fossil fuels. And, of course, there are some trade-offs to producing biofuels, such as additional land and water use. Although still useful to add to our sources of energy production.
As we see tremendous progress in agricultural productivity, we are able to produce more food than we need. Supply chains have also come a long way. And advances in biofuel production continue to increase efficiency…
Biofuels of the first generation usually come from food biomass (sugar, starch, etc.). This is often a direct trade-off with our food. But I’m going second generation biofuels has less impact on our nutrition. This energy production comes from non-food crops and biomass waste.
And taking it one step further, third generation biofuels are subsequently removed from food production. They mainly use algae as raw material. Algae can produce biomass faster and on a reduced land surface. This has huge advantages, but there are still many technical challenges to overcome. However, it is improving every year thanks to both private and public investment…
To accelerate biofuel innovation, government incentives play a role. Recently, in an effort to lower gas prices, the Environmental Protection Agency (EPA) increased the amount of ethanol that must be blended with gas in the United States. These moves continue to support some of the best biofuel companies…
Best biofuel stocks
- Archer-Daniels-Midland (NYSE: ADM)
- Bunge (NYSE: BG )
- Darling Ingredients (NYSE: DAR)
- Green plains (Nasdaq: GPRE)
- Gevo (Nasdaq: GEVO)
Archer-Daniels-Midland
Archer-Daniels-Midland is the largest company on this list of biofuel stocks. It is a huge agricultural company that operates all over the world. And it helps him provide raw materials for the creation of biofuel. ADM produces biodiesel from vegetable oils in the EU, Brazil, Canada and the USA
While not a straight-forward play in biofuels investing, ADM is one of the most reliable companies out there. It also continues to reward investors with higher dividends each year. And its payout ratio is low. Therefore, the company should be able to continue to increase it in the following years.
Bunge
Bunge is another huge agricultural company. It has also built an impressive supply chain that delivers from the farm to the consumer. And with this vertical integration, it also focuses on energy production and consumption…
In 2021, Bunge announced a partnership with Chevron (NYSE: CVX). this joint venture will help meet the demand for renewable fuels. Bunge also collaborates with BP (NYSE: BP) in the past to build a leading company in the low-carbon ethanol, sugar and bioelectricity markets in Brazil.
To see more food supplies, check out this list the best shares of agriculture. There are many good reasons to invest in these companies. For example, they can pass on the cost of inflation to their customers.
Darling Ingredients
Darling Ingredients is a smaller biofuel stock than the previous two. Although, it gives some more direct access to renewable energy production. The company is based in Texas, but has more than 200 processing plants around the world.
Darling Ingredients focuses on reducing food waste. This creates a key ingredient for renewable diesel fuel from waste oil and meat offal. And as more companies set sustainability goals, Darling Ingredients can lend a hand. This should help boost sales in the coming years.
Green plains
Green Plains is a leading agricultural technology company based in Omaha, Nebraska. It is one of the largest producers of ethanol in North America. It has more than 10 biorefineries throughout the United States. It also processes approximately 300 million bushels of corn each year.
Founded in 2004, Green Plains has grown rapidly to become one of the top biofuel companies. And that makes it the most popular biofuel stock to consider. According to the USDA, every gallon of biofuel reduces greenhouse gas emissions by 46% compared to a gallon of gasoline.
Gevo
Gevo is the smallest company on this list. This is associated with greater risk, but also with the direct impact of modern biofuels. The company works with renewable chemicals to create bio-based alternative fuels.
Gevo is helping to commercialize the next generation of renewable gasoline, as well as diesel and jet fuel. The company recently bought land for a the new Net-Zero 1 facility. It expects to produce 55 million gallons of sustainable jet fuel per year. And since aviation is a big contributor to CO2 emissions, Gevo should see a lot of demand for renewable jet fuel in the coming years.
Investments are not only in biofuel stocks
The best biofuel stocks can be a great addition to your portfolio. Although there are many factors to consider. And it’s good to do your own due diligence. When it comes to investing, it’s not one size fits all…
By buying many different stocks, you can also limit your risk. And today there are many investment opportunities. But the best investments come and go. Markets always move, and these investment bulletins can help you stay up to date.
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Brian Kem double-majored in finance and accounting at Iowa State University. After graduation, he went to work for a cryptocurrency company in Beijing. After returning to the US, he began working with financial publishing houses and also passed the CFA exams. When Brian isn’t researching and sharing ideas online, you can usually find him rock climbing or exploring nature.
