John Quealy, vice president and energy technology analyst at Canaccord Adams, told CNBC’s “Power Lunch” that the immediate outlook for corn-based ethanol stocks is weak.
“There’s a lot of corn ethanol out there right now -- about five billion gallons last year -- and a lot of corn ethanol stocks,” Quealy said Monday. “We think the risk/reward for corn ethanol is relatively flat given where food prices are right now per bushel as well as ethanol prices per gallon.”
He suggested investors take a “basket approach” to investing in alternative energy and also consider established sectors such as natural gas and coal-to-liquid fuels.
He said cellulosic ethanol looks promising, but is now speculative. He suggested investors willing to take on risk take a look at SunOpta and Diversa and balance them with Archer Daniels Midland, an established company.