Raven Biofuels International (OTCBB:RVBF) intends to become a global leader in the production and distribution of high quality, fuel-grade cellulosic ethanol. Cellulosic ethanol is not derived directly from corn but is derived from agricultural byproducts, such as corncobs, sawdust, oat bran, and wheat bran.
This technology is in great demand globally and Raven Biofuels is one of the few companies that is ready to go into commercial-scale production. Raven Biofuels acquired much of this technology in a recently announced merger with Pure Energy. Their technology is based on a classic oil refinery model where the inputs will produce both ethanol and chemicals (furfural).
The market for cellulosic ethanol and chemicals is estimated to exceed $100 billion annually in the U.S. alone; the global market demand will be even greater. This market demand is being driven by several factors. First is the price of oil. With oil over $112 per barrel and still climbing, alternative fuel sources become more attractive. Second is energy security, as Raven’s product is ‘home-grown’. Third is climate change and environmental awareness. As mentioned earlier, Raven’s technology utilizes only agricultural byproducts and will not add to global warming.
With these factors in mind, the overall demand for this industry looks set to grow, no matter if the US economy tips into a recession or not. Raven Biofuels’ recent stock price of $1.22 has the company trading at 2x-10x under the current valuations of its peers. Based on this, the stock has excellent upside potential.
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