Rex American Could Double as Ethanol Margins Improve

Rex American Resources (REX) is a value play in the ethanol industry. In my last article on Rex (Why Rex American Resoures Could Be Worth 70% More), I suggested the stock had 70% upside based on the potential to earn $2.50/share this year, up significantly from last year's pro forma $1.41 and well above the consensus forecast of $1.68.

Rex American Resources (REX) recently reported strong third quarter results that I think suggest earnings acceleration into the fourth quarter and the new year. EPS were $0.44 versus consensus forecast (two analysts) at $0.29.

Do you feel like you are paying too much for gasoline? At least you did not have to fill up for the Daytona 500. The special ethanol-blended fuel that NASCAR drivers put into their tanks at the race on Sunday cost more than twice the national average for regular unleaded. And at about 18 gallons per tank, that comes to about $150 a fill up in a car that gets single-digit miles per gallon!

Biofuels submits:The Ethanol Market This Week Will Focus on:

(WASHINGTON) — Cheaper gas drove down a measure of wholesale prices in November for the second straight month, a sign inflation remains mild. The producer price index fell 0.8 percent last month, the steepest drop since May, the Labor Department said Thursday. That follows a 0.2 percent decline in October. The index measures the cost of goods before they reach the consumer. Gas prices fell last month by the most in more than three years. Food prices, however, rose by the most in nearly two years, pushed higher by costlier beef and vegetables.

From the WSJ yesterday: After a sizzling start to the year, gasoline futures prices are sliding, easing pressures on drivers and the U.S.

Rex American Resources (REX) recently reported Q4 results with some important updates. These include the closing of an underperforming plant and strong results from Rex's Nugen plant. I believe the results point to much higher earnings for 2011, despite weaker ethanol crush margins. Based on the higher earnings as well as its book and market value of assets, REX could be worth $28. REX reported Q4 results that looked quite strong.

Gary Townsend submits:This morning. Equity futures are lower this morning, with attribution - though there was little incremental - to Fed Chairman Bernanke’s 60 Minutes interview last evening. After fair value adjustment, December SPX futures are down -6.24 points at 1217.70, near the worst levels of the morning.