The impact of the clean energy drive on industrial sectors has been  the primary focus of analysts and economists worldwide, overshadowing the adaptive agricultural industry. With the Biden administration expected to strike agricultural trade deals to foster more stability in the sector, U.S.  farm exports, which declined sharply under the Trump administration, are likely to revive in the near future. The U.S. has set an agricultural export target of $43.50 billion for fiscal 2021, up 19% year-over-year.

The biofuel industry should benefit from a recovery of the U.S. agricultural industry, which, in turn, could accelerate the clean energy drive domestically and internationally. The market for biofuels is expected to grow at a CAGR of 8.3% over the next decade, hitting $307.01 billion by 2030. With widespread applications, renewable energy is expected to play an increasingly significant role in the country’s industrial and economic performance going forward.

While major companies operating in the biofuel and agricultural sectors suffered painful losses during the initial days of the pandemic, most of them have made an impressive comeback by streamlining their business operations. As such, we think Cosan Limited (CZZ), Green Plains, Inc. (GPRE) and Bioceres Crop Solutions Corp. (BIOX) should attain impressive highs in the near future.

Cosan Limited (CZZ)

CZZ is a natural gas manufacturing and oil marketing company that operates through six segments – Raizen Energia, Raizen Combustiveis, Comgas, Logistica and Moove. Headquartered in Brazil, CZZ has an international supply chain and is known for its sugarcane derivative products and natural gas and fuel distribution services.

According to a recent report by Reuters, CZZ is planning to reorganize its American Depositary Shares listing to improve the company’s liquidity. It is also planning to fully incorporate its logistics and financial arm. CZZ plans to concentrate  its  free-floating shares by consolidating multiple subsidiaries and inter-related companies into one stock, thereby improving the trading volume.

CZZ’s revenues have increased 43.6% sequentially to R$19.51 billion in the third quarter ended September 30, 2020. Its gross profit has increased 72.6% from the prior quarter to R$2.91 billion, while its EBITDA has risen 57.1% sequentially to R$2.98 billion. Its net income has improved 118.7% from the prior quarter to R$222.90 billion.

A consensus EPS estimate of $1.30 for the current year represents a 26.2% improvement year-over-year. CZZ has an impressive earnings surprise history as well; it beat the Street’s EPS estimates in three  of the trailing four quarters. A consensus revenue estimate of $12.95 billion for the about-to-be reported fiscal 2020 represents  a 239.5% improvement from the same period last year.

CZZ has doubled since hitting its 52-week low of $8.56 in March last year. Analysts expect CZZ to hit $111.54 soon, reflecting a 558.8% potential upside.

Under POWR Ratings, CZZ has a “B” for Trade Grade and Industry Rank. In the 36-stock Agriculture industry, it is currently ranked #24.

Green Plains, Inc. (GPRE)

GPRE produces and markets ethanol and supplemental goods internationally. the company’s operations can be categorized into four segments – Ethanol Production, Agribusiness and Energy Services, Food and Ingredients, and Partnership. It has ethanol manufacturing plants in five states and more than  32 storage facilities. GPRE also provides corn processing services and produces high protein feed ingredients.

On January 19, GPRE teamed up with Ospraie management to acquire Fluid Quip Technologies. The acquisition gives GPRE unrestricted access to a fully scalable commercial clean sugar technology production facility. The availability of this patented technology should allow GPTE to increase its production capacity and  achieve economies of scale.

GPRE’s revenues from the food Ingredients and partnership segments have risen 6.1% year-over-year to $21.38 million in the third quarter ended September 30, 2020. Its gross margin has grown 135.3% from the same period last year to $30.13 million, while its EBITDA has improved substantially from a  negative year-ago value to $6.71 million.

Analysts expect GPRE’s EPS to increase 100.5% in fiscal 2021, and at a rate of 15% per annum over the next five years. The consensus revenue estimate of $2.77 billion for the current year represents a 30.6% rise from the same period last year.

GPRE has gained more than 410% since hitting its 52-week low of $3.77 in March last year. The stock hit its 52-week high of $20.31 yesterday. Analysts expect GPRE to hit $21.17 soon, representing an 8.6% potential upside.

It is no surprise that GPRE is rated “strong Buy” in our POWR Ratings system, with an “A” for trade Grade, Buy & Hold Grade and Peer Grade, and “B” for Industry Rank. It is ranked #8 in the Agriculture industry.

Bioceres Crop Solutions Corp. (BIOX)

BIOX provides crop productivity solutions such as seed treatments, fertilizers and adjuvants internationally. The company operates through three segments – Seed and Integrated Products, Crop Protection, and Crop Nutrition. Headquartered in Argentina, BIOX provides proprietary drought tolerant seed technology programs across the Americas and European regions.

In November BIOX acquired the membership interest in soybean joint venture Verdeca, as well as the licensing rights of goodwheat technologies from Arcadia Biosciences. This allows BIOX to strengthen  its leading position in the HB4 program, by ramping up soybean production and sales internationally.

BIOX’s revenues have increased 8% year-over-year to $42.20 million in the third quarter ended September 30, 2020. Its adjusted EBITDA has grown 30% from the year-ago value to $10.50 million, while its cash and cash equivalents balance has risen 446% from the prior-year quarter to $59.60 million.

A consensus EPS estimate of $0.33 for fiscal 2021 represents  a 266.7% improvement year-over-year. The consensus revenue estimate of $190 million for the current year represents  a 9.8% rise from the same period last year.

BIOX has gained more than 85% since hitting its 52-week low of $4.33 in March last year. the stock hit its 52-week high of $9.10 on January 20. Analysts expect BIOX to hit $12.50 in the near future, representing  a potential upside of 56.3%.

BIOX’s POWR Ratings reflect this promising outlook. It is rated “Strong Buy”, with an “A” for Trade Grade and Peer Grade, and “B” for Buy & Hold Grade and Industry Rank. It is currently ranked #10 in the same industry.

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CZZ shares were trading at $17.76 per share on Wednesday afternoon, up $0.28 (+1.60%). Year-to-date, CZZ has declined -3.64%, versus a 0.36% rise in the benchmark S&P 500 index during the same period.

About the Author: Aditi Ganguly

Aditi is an experienced content developer and financial writer who is passionate about helping investors understand the do’s and don'ts of investing. She has a keen interest in the stock market and has a fundamental approach when analyzing equities. More...

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