Tech investing has always been a lucrative yet volatile field, but it remains a strong bet with the world advancing at a breakneck pace. Clean energy, specifically, biofuel is poised to be the next popular niche within the technology investment field.
Biodiesel, solar, natural gas, and even fuel cells made of hydrogen have all risen recently as more governments and corporations are shifting towards policies that support clean and renewable energy. If you are interested in buying some biofuel stocks, you must research the biofuels developers before choosing which biofuels stocks to invest in.
The current political climate makes it a perfect time to invest in biofuel stocks. The government has been backing public biofuels stocks, and top biofuel companies are finally starting to see sustainable shareholder returns and consistent profits.
Of course, timing is everything with investments, and successful biofuels companies have finally reached the commercially viable threshold.
Also, with biofuels developers constantly creating new technology and biofuels manufacturing plants improving their output, there has never been a better time to invest in biofuel stocks than right now.
We have put together a list of the top biofuel companies that offer the best biofuels stocks for your buck this year.
Types of Biofuels Companies
There are much green energy and clean energy companies out there, but not all of them are actually public biofuels companies. For investing, it is important to understand what types of biofuels companies are out there. Biofuels are made of biomass that is converted into liquid fuels directly.
The most common type of biofuels is biodiesel and ethanol. There are also renewable hydrocarbon fuels which are also made from biomass, but they are less common and still not as readily available as other types.
Bio-alcohol, Propanol, Butanol, Green Diesel, cooking oils, Biogas, Biohydrogen, Dimethylfuran, and Cellulosic ethanol are also all biofuels that biofuels developers use to help move clean, renewable energy forward.
There are a few types of private and public biofuels companies; while most offer stock options, some are privately held. Some companies are dedicated to biofuels manufacturing and those that are primarily biofuels developers. There are also biofuels distributors and research companies.
The two main categories can further be separated by those than first-gen biofuels companies and second-gen biofuels companies.
First-generation companies are those that converted edible food parts into biomass.
While these companies were innovative, they have mostly given way to second-generation biofuels companies that use alternative feedstock that doesn’t threaten the human food supply.
Our Selection Criteria
Several successful biofuels companies offer public biofuels stocks for investment. We have taken a look at 30 of the top biofuel companies and whittled down the list to give you the best performers. Each of the biofuel stocks on our list will have to have seen positive gains for at least the last 12 months to make our list.
We also only included companies that have a 50% or more interest in biofuels specifically, instead of green or clean energy in general.
When considering biofuels stocks to invest in, keep in mind that investing of any form carries a certain amount of risk, which holds true for this industry. Our top 9 best biofuels stocks will have generated high returns for 2021, and the number was calculated based on their 18-month earnings report.
Our Top Picks Of The Best Biofuels Stocks This Year
This stock has been around for more than two decades, but with a higher emphasis on reducing the cost of air travel and jet fuel, it has been growing by leaps and bounds. In recent news, they have started working with Chevron to develop alternative fuel sources to help reduce the need for fossil fuels globally.
They are also a defining presence in the health & beauty sector, which is one of the biggest consumers of fuel-based resources worldwide.
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Archer-Daniels-Midland Company – ADM
Archer-Daniels-Midland Company has been producing advanced biofuels for years. They offer an eco-friendly, non-toxic alternative the fossil fuels that is completely sustainable. One of their tops sellers is a diesel substitute made from vegetable oils sourced from several countries.
It helps to reduce greenhouse gas emissions which is a hot topic currently, which is one of the reasons this stock has been performing so well. All of the products ADM produces are also fully compliant with North American, South American, EU, and US quality standards, making it an ideal stock for both local and international portfolios.
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Gevo’s biofuel products are created mainly as a replacement for infrastructure and engines that are dependent on traditional fossil fuels.
They are able to outperform older fuels exponentially and also reduce emissions at the same time. ESG investing has become rather fashionable, but GEVO has been in it for the long haul.
The stock shot up earlier this year when green investing was trending as a high peak.
It performed much better than other stocks in the same field thanks to the low starting prices, which have now settled but remain affordable even for novice investors. If you are looking to enter the clean-energy market in 2021, Gevo is a great option if you want to support sustainability.
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Green Plains Inc, GPRE, is a renewable energy and biofuel processing and distribution company. Their diverse portfolio offers various services such as cattle feedlot operations, ethanol production, commodity marketing, grain handling and storage, commodity distribution, and corn oil production.
This US-based company has been working on low-emissions and sustainable biofuels since 2004 and has shown steady and sustainable growth through the years.
They have recently announced they will work with Fagen, Inc. to install a new biorefining platform, making it one of the global companies that focus on value-added and sustainable products. As far as investments go, this is one of the safer options that will provide moderate but long-lasting returns on every dollar invested.
Renewable Energy Group-REGI
Renewable Energy Group, Inc., REGI is an American company dedicated to producing renewable chemicals and biofuels. They also sell their renewable products through their Biomass-Based Diesel company based in Ames, Iowa.
The company was founded in 1996 and has persevered through several technology advancements, setbacks, and regulation changes. Previously the stock was offset by government programs and funding like most clean energy stocks, but in recent years as the trend towards clean energy has moved toward the forefront, they have boasted positive gains.
There is a risk of loss like any investment, but with this biofuels stock and its steady track record, it’s as close as you can get to a sure thing in this field.
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Codexis, Inc., CDXS is one of the top producers of biofuel components in the US. They specifically develop biocatalysts that are used in the fine chemicals and pharmaceutical markets worldwide.
This sustainable and eco-friendly product has made it easier and more cost-effective for companies to develop drugs and other essential chemicals without creating a drain on the earth’s resources.
The biocatalyst panels and kits from codex help companies by giving them an accurate tool that allows them to screen for and create viable enzymatic manufacturing processes for products and drugs they want to market. The company has been around for almost 20 years and features a sales ratio of 19.89.
The past 12 months’ earnings have shown an increase of 74%, making it a hot stock for those looking to invest in green companies.
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Darling Ingredients is a publicly traded company that focuses on developing biofuels and other ingredients from sustainable sources. They create products from both inedible and edible bio-nutrients. The sustainable items they produce are turned into products for the technical, pharmaceutical, and fertilizer industries.
They also create a sustainable feed, pet food, consumables for humans as well as bioenergy. Unlike other companies, DAR has been around since 1882.
Their focus has always been on sustainable production, which is one reason their stock is a solid investment. In recent weeks the stock has moved up to the top percentile among all biofuel stocks and is set to continue the trend for at least the next several market cycles.
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Green Plains Partners LP-GPP
Green Plains Partners LP, GPP, is a company focused on ethanol. As a biofuel, this is one of the first green sources of energy to hit the market and remains a widely used renewable resource that has helped to reduce the dependence the world has on fossil fuels.
The company both develops and acquires ethanol and operating terminals, transport assets, and storage tanks all across the country. Founded in 2007, this sustainable company has seen steady growth over the last several years.
The current stock price is just over $800 per share, which is higher than most US-based biofuel equities and has a positive forecast of gains that are expected to remain for at least the next 4 cycles.
MGP Ingredients MGPI is one of the most well-known producers and suppliers of specialty wheat proteins, starches, and premium distilled spirits. They were founded in 1941 and are based in the US. In addition to offering Distilled spirits, this company also works as a supplier for biofuels and biofuel additives.
The company went IPO in 1990, making it one of the older green stocks on our list. They have a higher debt rate than most green stocks but also offer a steady rate of growth which is essential for long-term investments.
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Are Biofuel Stocks Worth The Risks?
Any type of investment comes with a certain number of risks. However, biofuels are currently at a crossroads in the current investment market.
Over the last decade, the production of this renewable energy source has grown more than six-fold.
That being said, they still account for less than 5% of all the fuel on the roads today.
There is still a higher production cost when it comes to producing biofuels when compared to using exiting fossil fuels; however, the effects on the environment are clear. The dominant biofuel on the market is corn-based ethanol, but with it comes the ESG issued of generating more edible crops solely for the purpose of fuel stock.
Companies that offer corn-based ethanol are doing well; however, producing next-generation biofuels is doing much better.
Waste-based fuels, cellulosic ethanol, and other forms of biofuel are being developed every day. Most governments hoped for a quicker scale-up of biofuels and biofuel products. In some places, production has failed to meet projections for several years, resulting in a scaling back of ESG mandates.
Subsidies have long been the main driving force in allowing companies to continue advancing the field. Still, with budget tight, investment is quickly becoming the main driver in sustainable fuel development.
While there are risks involved, and growth may be slow, investing in biofuel is both good for the planet and for your long-term portfolio gains.