4 Biofuel Stocks to Watch in 2011

As the White House lobbies to steer government subsidies away from Big Oil
toward developers of green alternatives such as biofuels, the prospects of a hot
sector awash in new cash could spell opportunity for investors in 2011. But
buyers beware: this embryonic market is R&D-intensive and can turn on a dime as
political tides ebb and flow. Biofuels can be made from many sources – the
most common being ethanol, which is derived from corn. At least some level of
increased federal spending on green fuel alternatives makes sense –
particularly as the crisis in Egypt reminds lawmakers and investors of the
volatility of oil. Oil, gas and coal producers currently receive some $4 billion
a year in federal subsidies, but President Obamas plan to redirect that money to
green energy will find stiff opposition in the new Congress. However, even as
Republicans seek to cut nearly $100 billion from the budget, its likely to
include some clean energy investment, perhaps in the $300 million range. And the
White House still has regulations to accomplish goals that the legislative
process can't.  Case in point: the Environmental Protection Agency last month
raised the percentage of ethanol allowed in vehicles made from 2001 and beyond
to 15% from 10%, aiding an industry that has had to contend with double-digit
bankruptcy filings since mid-2009. The outlook for the biofuels industry is
brighter this year than it was in 2010.  Here are four stocks to keep an eye on
in 2011: 1.  Archer Daniels Midland (NYSE:ADM).  This companys strong corn
processing profits, which reflected rising demand for corn as a means of
alternative energy, helped boost the company's earnings by 30% in its fiscal
second quarter. Its bioproduct profit jumped by $161 million to $280 million,
driven primarily from a boost in ethanol margins and volumes. 2. Amyris
(NASDAQ:AMRS) is producing Biofene, an alternative fuel that is developed from
sugar cane.  It also has created a synthetic platform that can create
biological molecules. The company announced last month it has teamed with
Glycotech and Salisbury Partners to convert its renewable farnesene into
finished products. 3. Methanex (NASDAQ:MEOH) is the worlds largest supplier of
methanol to major international markets. The Vancouver-based company last month
reported earnings of $27.9 million in the fourth quarter, due to a rise in
methanol prices.  Although the company's Egyptian operation produced its
first methanol in November, Methanex closed its Cairo office, evacuated
international staff and their families and cut the number of employees at its
Damietta plant site in response to the recent crisis in that country. 4. SunOpta
(NASDAQ:STKL) is a Canada-based company focused on natural, organic and
specialty foods and natural health products. One of SunOpta's jewels is an 18%
stake in biofuel producer Mascoma.