Ethanol, also known as ethyl alcohol, is a renewable fuel that can be naturally produced through the fermentation of sugars by yeasts, or it can be man-made through petrochemical processes. Ethanol can be utilized for various applications, but it is majorly used in the US as a gasoline additive in the transportation sector to enhance fuel efficiency and reduce emissions. According to the latest data released by the US Energy Information Administration on December 18, US fuel ethanol production saw a significant increase of more than 2% during the week ending December 13. At the same time, fuel ethanol stocks experienced a slight decline, while exports surged by nearly 33%.
A Catalyst for the Ethanol Industry
The E15 fuel blend, which contains 15% ethanol was restricted due to concerns about increased smog pollution in hot weather. However, earlier in 2024, the E15 fuel blend was temporarily approved in 49 states for the summer and the US government allowed the year-round E15 sales by 2025 only in certain Midwestern states. These regulatory changes boosted the ethanol industry margins as retailers sought to offer lower-cost fuel to consumers.
On December 17, a US government funding bill included a provision allowing year-round sales of gasoline with a higher ethanol blend, specifically E15. This inclusion represents a significant victory for the corn and ethanol industries, which have long advocated for the expansion of E15 sales to boost demand for their products. The plan also provides credits to some refiners for compliance with the US Renewable Fuel Standard (RFS), a mandate requiring refiners to blend billions of gallons of biofuels into the nation’s fuel supply or purchase credits from those that do. The biofuels industry has welcomed this provision, with Geoff Cooper, President of the Renewable Fuels Association, expressing hope that the funding bill would be swiftly enacted.
CoBank Report: U.S. Ethanol Production to Remain Steady
According to a report by CoBank, published on December 12, the US ethanol production in 2025 is expected to remain largely unchanged from 2024 levels, with the industry facing significant political and regulatory uncertainties. The report highlights that while the US Energy Information Administration (EIA) predicts that ethanol production will average about 1.05 million barrels per day in 2025, the sector is navigating several challenges, including policy uncertainty surrounding the Renewable Fuel Standard (RFS) program, small refinery exemptions (SREs), and the potential impact of tariffs.
The report notes that the incoming Trump administration is likely to take a cautious approach to proposing new RFS renewable volume obligations (RVOs) for 2026-2029, preferring to wait for actions on pending SREs. During the previous Trump administration, 34 SREs were granted for the 2017 RFS compliance year, whereas the Biden administration has not approved any SREs and has denied 79 SRE petitions to date. This contrast in policy approaches adds to the regulatory uncertainty facing the industry.
Despite these challenges, the report identifies some positive trends, particularly in the area of global demand for ethanol. CoBank emphasizes that expanding renewable blending requirements in countries around the world are contributing to a growing global demand for ethanol. US ethanol exports are projected to set a new volume record in 2024, with Canada emerging as the top destination. However, the potential for trade policy changes, including the imposition of tariffs on world trading partners and retaliatory tariffs on US agricultural products, including ethanol and distillers’ dried grains (DDGs), could limit export growth. Additionally, the expansion of corn ethanol production in Brazil may increase competition in the global market, further impacting US ethanol exports.
With the ethanol industry facing a mix of regulatory changes, global demand shifts, and political uncertainties, the sector is poised for significant developments in the coming years. However, the potential for increased global demand offers promising opportunities for growth. With that in context, let’s take a look at the 11 best ethanol stocks to invest in now.
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Our Methodology
To compile our list of the 11 best ethanol stocks to invest in now, we scanned renewable fuels ETFs plus online rankings to compile an initial list of 20 companies that are involved in the production, sale, or processing of ethanol. Then we used Insider Monkey’s Hedge Fund database to rank 11 stocks according to the largest number of hedge fund holders, as of Q3 2024. The list is sorted in ascending order of hedge fund sentiment.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
11 Best Ethanol Stocks To Invest In Now
11. Aemetis, Inc. (NASDAQ:AMTX)
Number of Hedge Fund Investors: 3
Aemetis, Inc. (NASDAQ:AMTX) is a renewable fuels and biochemicals company primarily focused on producing ethanol, biodiesel, and renewable natural gas. The company operates an ethanol plant located in California.
Aemetis, Inc. (NASDAQ:AMTX) is pioneering an innovative approach to ethanol production by integrating biogas, specifically sourced from dairy manure, into its manufacturing process. In Q3, the company invested $4.5 million in the construction of dairy digesters. These digesters convert organic waste from dairy farms into biogas and transport it to the company’s ethanol facility in Keyes, California.
By utilizing this biogas as a fuel source, Aemetis, Inc. (NASDAQ:AMTX) can significantly reduce the carbon footprint of its ethanol production, thereby creating a “low carbon” ethanol product. This approach also makes the ethanol production process more economically viable. In Q3, Aemetis, Inc.’s (NASDAQ:AMTX) Keyes plant, which has an annual production capacity of 65 million gallons per year, generated $45 million in revenue by producing 15.5 million gallons of low-carbon ethanol.
Aemetis, Inc. (NASDAQ:AMTX) is actively working on building strategic partnerships and expanding the market for ethanol through the promotion and adoption of E15, a 15% ethanol blend. The company is also investing in capital projects to reduce the capital intensity of its ethanol production.
10. Gevo, Inc. (NASDAQ:GEVO)
Number of Hedge Fund Investors: 7
Gevo, Inc. (NASDAQ:GEVO) is a Colorado-based company that specializes in converting renewable energy into energy-dense liquid hydrocarbons for use as renewable fuels. The company’s products include renewable gasoline and diesel, sustainable aviation fuel, renewable natural gas, and ethanol, as well as animal feed and protein. Gevo, Inc. (NASDAQ:GEVO) is a pioneer in the conversion of agricultural feedstocks, particularly corn, into protein and ethanol, this ethanol is then further refined into high-value products such as jet fuel.
Gevo, Inc. (NASDAQ:GEVO) is poised for significant growth through a combination of strategic acquisitions and technological advancements. In Q3, the company announced the acquisition of ethanol production plant and carbon capture and sequestration (CCS) assets of Red Trail Energy. The acquisition brings in a low-carbon ethanol plant with a 65 million gallons per year capacity and an operating CCS site that is currently capturing 160,000 metric tons of carbon annually and generating monetizable tax credits under section 45Q of the tax code.
Furthermore, Gevo, Inc. (NASDAQ:GEVO) was granted two patents for its breakthrough ethanol-to-olefin (ETO) process. These patents cover the innovative methods and systems used to convert ethanol into olefins, which are essential building blocks for a wide range of industrial and commercial products.
9. REX American Resources Corporation (NYSE:REX)
Number of Hedge Fund Investors: 8
REX American Resources Corporation (NYSE:REX) is a leading ethanol producer and a pioneer in Carbon Capture and Sequestration (CCS) technology. The company’s core business revolves around the production of ethanol and related co-products, with a strategic focus on expanding its production capacity and advancing CCS projects to reduce carbon emissions.
REX American Resources Corporation (NYSE:REX) has been actively pursuing several key initiatives to enhance its ethanol production capabilities and drive long-term growth. One of the most significant projects is the expansion of the One Earth Energy ethanol production facility in Gibson City, Illinois. The company is on track to complete the expansion to 175 million gallons per year by the middle of 2025. Once the expansion is complete and emission certification is achieved, REX American Resources Corporation (NYSE:REX) plans to further permit the facility to produce up to 200 million gallons per year.
In addition to the capacity expansion, REX American Resources Corporation (NYSE:REX) is making substantial progress on its carbon capture and compression (CCS) project at the One Earth Energy facility. The CCS project is designed to reduce carbon emissions from the ethanol production process. The carbon capture and compression portion of the project is substantially complete, and the company is awaiting the final approval of Class 6 injection wells from the Environmental Protection Agency (EPA), which is expected by July 2025.
The company is actively evaluating potential acquisitions of new ethanol plants and is open to exploring other business ventures that can benefit from its management expertise.
8. Ultrapar Participações S.A. (NYSE:UGP)
Number of Hedge Fund Investors: 10
Ultrapar Participações S.A. (NYSE:UGP) is a leading Brazilian conglomerate with a diversified portfolio of energy and logistics businesses. The company through its Ipiranga brand operates approximately 5,800 gas stations across the country and distributes original ethanol and additive ethanol at their gas stations as a standard fuel option.
Ultrapar Participações S.A.’s (NYSE:UGP) commitment to the ethanol business extends beyond distribution. The company is making significant investments in biofuel infrastructure to enhance its production and storage capabilities. Additionally, the company is investing in new technologies and processes to improve the efficiency of ethanol production.
Ultrapar Participações S.A. (NYSE:UGP) is also involved in various collaborative initiatives to promote the use of ethanol and other renewable energy sources. The company is a strong advocate for regulatory changes that support the growth of the biofuels industry and has been actively involved in discussions with the Brazilian Agency of Oil and Gas to improve the regulatory framework for biofuels.
One of the key challenges in the Brazilian ethanol market is the prevalence of illegal practices, such as tax evasion and the sale of adulterated fuels. Ultrapar Participações S.A. (NYSE:UGP) has been at the forefront of efforts to combat these issues, working closely with regulatory authorities and industry partners to promote fair competition.
7. Cosan S.A. (NYSE:CSAN)
Number of Hedge Fund Investors: 11
Cosan S.A. (NYSE:CSAN) is a leading Brazilian diversified company with a strong presence in the bioenergy including ethanol along with logistics, and services sectors. The company’s ethanol business is primarily driven by Raízen, through a joint venture with Shell. The company is known for its E2G technology, which uses sugarcane waste to produce high-quality ethanol.
Cosan S.A. (NYSE:CSAN) has been focusing on improving production yields and efficiency by investing in advanced agricultural techniques and biotechnology, which in turn increases the efficiency of ethanol production. Furthermore, the company is exploring new markets and applications for its ethanol, in industrial and chemical markets, where ethanol can be used as a raw material in various processes. By diversifying its customer base and applications, Cosan S.A. (NYSE:CSAN) aims to reduce dependency on the automotive fuel market and create additional revenue streams.
Cosan S.A. (NYSE:CSAN) is also integrating digital technologies to optimize supply chain management and improve operational efficiency to stay ahead of industry trends. The company is also exploring the use of IoT (Internet of Things) and AI (Artificial Intelligence) to monitor and optimize production processes, from sugarcane cultivation to ethanol refining and distribution.
6. The Andersons, Inc. (NASDAQ:ANDE)
Number of Hedge Fund Investors: 12
The Andersons, Inc. (NASDAQ:ANDE) is a diversified company operating in the trade, renewables, and nutrient and industrial sectors across the United States, Canada, Mexico, Egypt, Switzerland, and internationally. The company produces ethanol for fuel and industrial applications and has four ethanol plants, strategically located in the Eastern Corn Belt.
The Andersons, Inc. (NASDAQ:ANDE) is focusing on diversifying its revenue streams within the ethanol business. The company has a strong interest in Sustainable Aviation Fuel (SAF) and is monitoring technological and policy developments related to SAF. The company’s interest in SAF is particularly centered around the conversion of ethanol into aviation fuel. Management believes that the regulatory environment is favorable for SAF, and anticipates that clearer guidelines and incentives will be established soon, which could significantly facilitate the growth of the SAF market.
Furthermore, The Andersons, Inc. (NASDAQ:ANDE) has been actively investing in projects to improve corn oil extraction, combined heat and power, and carbon capture and sequestration (CCS). These investments enable the company to capitalize on emerging opportunities in the renewable energy sector, such as lower carbon-intensity ethanol. The company recently completed all of its fall maintenance shutdowns and has ensured that its ethanol plants are well-maintained to operate at optimal efficiency.
5. Adecoagro S.A. (NYSE:AGRO)
Number of Hedge Fund Investors: 13
Adecoagro S.A. (NYSE:AGRO) is a leading diversified agribusiness company with operations in Brazil, Argentina, and Uruguay. The company’s Ethanol and Energy segment produces sugar, ethanol, and energy. Adecoagro S.A. (NYSE:AGRO) also sells carbon credits and renewable natural gas certificates.
Adecoagro S.A. (NYSE:AGRO) has been actively expanding its ethanol production capabilities and is focusing on maximizing the production of Hydrous Ethanol, a mixture of ethanol and water that is used in vehicles and for industrial purposes. The company’s strategic focus on Hydrous Ethanol is driven by its better margins and the growing preference for this product over other forms of ethanol.
Adecoagro S.A. (NYSE:AGRO) is employing a strategic approach to inventory management to maximize its ethanol sales. The company has been holding onto 49% of its year-to-date production to take advantage of anticipated price increases. The company’s management expects that ethanol prices will rise during the inter-harvest season due to lower supply and increased demand. By strategically timing its sales, the company can maximize its returns and capitalize on market fluctuations.
To further strengthen its ethanol business, Adecoagro S.A. (NYSE:AGRO) is continuously improving its operational efficiency. The company is investing in the expansion of its sugarcane plantation in Brazil, which serves as the primary raw material for ethanol production. These investments include the acquisition of new land and the development of advanced agricultural techniques to maximize yields. Additionally, Adecoagro S.A. (NYSE:AGRO) is addressing bottlenecks in the milling process to increase production capacity.
4. Green Plains Inc. (NASDAQ:GPRE)
Number of Hedge Fund Investors: 25
Green Plains Inc. (NASDAQ:GPRE) is a leading North American producer of renewable fuels, high-protein feed ingredients, and clean sugars. The company operates a diversified portfolio of assets, including ethanol plants, protein production facilities, and clean sugar technology.
Green Plains Inc. (NASDAQ:GPRE) is actively pursuing a project to decarbonize its 287 million-gallon ethanol footprint in Nebraska, which is expected to be one of the largest and earliest platforms for carbon sequestration in the industry. This initiative, known as the “Advantage of Nebraska” strategy, involves the construction of carbon capture and sequestration (CCS) facilities at several of the company’s plants, including Central City, Wood River, and York. The decarbonization efforts are part of a broader plan to capitalize on the growing demand for low-carbon fuels and the associated financial incentives. The company expects to generate approximately $130 million in annual earnings from carbon credits starting in the second half of 2025, assuming the current 45Z credit value and $70-ton carbon credit.
In addition to decarbonization, Green Plains Inc. (NASDAQ:GPRE) is leveraging its patented Clean Sugar Technology, which allows a dry-grind ethanol plant to produce high-quality dextrose and glucose syrups to differentiate its ethanol business and capture new market opportunities. These syrups are used in food and beverage formulations, as well as in the fermentation and catalytic conversion processes for renewable chemicals and bio-based materials such as bioplastics, biochemicals, synthetic biology, and alternative proteins.
3. Archer-Daniels-Midland Company (NYSE:ADM)
Number of Hedge Fund Investors: 34
Archer-Daniels-Midland Company (NYSE:ADM) is one of the largest agribusinesses globally, with a significant focus on ethanol production. The company produces bioethanol derived from corn and operates ethanol production sites in Illinois, Iowa, Nebraska, and Minnesota.
To enhance its position in the ethanol market, Archer-Daniels-Midland Company (NYSE:ADM) has been focusing on implementing several automation and digitization projects in its Carbohydrate Solutions Business that can improve manufacturing costs and operational efficiency. The company is also forming strategic partnerships and collaborations with other industry leaders. These collaborations aim to leverage the strengths of each partner to develop more efficient and sustainable ethanol production methods. For instance, Archer-Daniels-Midland Company (NYSE:ADM) has partnered with biotechnology firms to explore advanced fermentation techniques that can improve ethanol yield and reduce production costs.
Furthermore, Archer-Daniels-Midland Company (NYSE:ADM) is investing in research and development to identify how advanced biofuels and renewable chemicals can serve as sustainable alternatives to traditional petroleum-based products. Furthermore, the company is exploring the potential of ethanol in the production of bioplastics and other sustainable materials.
2. BP p.l.c. (NYSE:BP)
Number of Hedge Fund Investors: 36
BP p.l.c. (NYSE:BP) is one of the world’s largest integrated oil and gas companies in the world. The company has been actively transitioning towards a more sustainable and low-carbon future by focusing on renewable energy, including biofuels such as ethanol, biogas, and other sustainable energy solutions.
BP p.l.c. (NYSE:BP) is focusing on expanding its footprint within the Brazilian ethanol business. On October 1, the company completed the acquisition of the remaining 50% stake in its bp Bunge Bioenergia S.A. in a transaction valued at approximately $1.4 billion. This acquisition now makes BP p.l.c. the sole owner of the joint venture and is expected to increase its capacity to produce around 50,000 barrels of ethanol equivalent per day from sugarcane through 11 agro-industrial units across five Brazilian states. The company believes that full ownership will unlock further growth opportunities, including the development of next-generation ethanol, sustainable aviation fuel (SAF), and biogas.
In addition to the acquisition, BP p.l.c. (NYSE:BP) is also exploring new bioenergy platforms to diversify its renewable energy portfolio. The company is investigating the development of next-generation ethanol, which promises to be more efficient and sustainable. Additionally, BP p.l.c. (NYSE:BP) is assessing opportunities to produce sustainable aviation fuel (SAF).
1. Valero Energy Corporation (NYSE:VLO)
Number of Hedge Fund Investors: 49
Valero Energy Corporation (NYSE:VLO) is one of the largest global refiners and ethanol producers. The company operates 14 ethanol plants across the US and Canada converting corn into fuel and other products.
In the ethanol segment, Valero Energy Corporation (NYSE:VLO) is focusing on its ability to optimize production and reduce operating costs, which are critical factors in maintaining profitability and competitiveness. In Q3 the company’s ethanol production volumes averaged 4.6 million gallons per day, a significant increase of 255,000 gallons per day from the same period in 2023. This growth in production volumes was driven by the company’s strategic investments in capacity expansion and technological advancements. In Q4, the company expects to produce 4.7 million gallons per day, with operating expenses averaging $0.37 per gallon, including $0.05 per gallon for noncash costs such as depreciation and amortization.
Looking ahead, Valero Energy Corporation (NYSE:VLO) is poised for further growth in the ethanol business. The company continues to invest in state-of-the-art production technologies and facilities that not only increase output but also improve the quality and sustainability of its ethanol products. The company is also exploring new market opportunities and expanding its distribution network to reach more customers and regions. Additionally, Valero Energy Corporation (NYSE:VLO) is committed to research and development, focusing on innovative processes that can further reduce costs and enhance environmental benefits.
While we acknowledge the potential of Valero Energy Corporation (NYSE:VLO) to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than VLO but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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