Is There Hope for the Ethanol Producers? (AVR; PEIX; VSE)

Back in April I had an en passant comment at the WSJ's Environmental Capital blog:

Environmental Capital - WSJ.com : Bodman on Biofuels: They're ...
Apr 18, 2008 ... Right now ethanol looks toppy around $2.54, um, where were we?
Comment by Climateer - April 19, 2008 at 5:19 pm ...
blogs.wsj.com/.../2008/04/18/

Ethanol went up to $2.56, then dropped 12.2%, bottoming at $2.25 Wednesday. It's reversed and closed Friday at $2.451. Here's the chart.

Saturday, Barron's had an interesting story:

Ethanol Stocks Are Poised to Refuel

Everyone's dumping on ethanol, but the biofuel has a bright future. Three stocks that could get a healthy burst of energy in the coming year.

NEXT TO CIGARETTES, FEW products are more vilified than ethanol. The corn-based alcohol used as a substitute for gasoline has been blamed for driving up food costs, leading to malnutrition and riots in the developing world. A top official of the United Nations has blasted ethanol as a "crime against a great part of humanity."

Even Wall Street, which loved ethanol stocks in 2006 and '07, has turned against the business, because of growing supply and concerns about the future of the controversial fuel. Ethanol producer VeraSun Energy (ticker: VSE), at 6, is down 61% this year, and off 80% from its 2006 high of 30. Aventine Renewable Energy (AVR), at 5.25, is down 59% on the year, and far below its '06 peak of 43, while Pacific Ethanol (PEIX), at 3.24, has fallen 60% year to date, and 90% from its '06 high. Yet, even after this shellacking, most analysts covering the industry currently rate the stocks Neutral or Sell.

Ethanol stocks recently got a momentary lift from their lowly levels after all three companies reported first-quarter operating profits, and Congress passed a farm bill, over a presidential veto, that preserves most of the government's ethanol subsidies. What's more, the rally may resume, as the stocks are depressed, the businesses are profitable and the companies generally trade below the replacement cost of their ethanol plants.

Aventine is valued at about $1.40 per gallon of ethanol capacity, while VeraSun trades at the equivalent of about $1.50 per gallon. It costs about $2 per gallon to build a new ethanol facility, or $200 million for a plant that produces 100 million gallons a year....MUCH MORE