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More importantly for Pacific Ethanol, California's renewed commitment to the LCFS and Oregon's adoption of the same will allow the company to increasingly generate financial returns from its recent investments in energy efficiency and emissions reduction projects despite the continued presence of low energy prices. While I am not yet convinced that this development will make the company as competitive as its Midwestern peers, its Aventine acquisition and extremely low forward P/E ratio (5.3x at the time of writing) diminish the importance of its lower margins. Given the consolidation in the industry that has been underway since late 2013, it is also feasible that Pacific Ethanol could become a buyout target for one of the industry leaders;Green Plains, Inc. (NASDAQ:GPRE) , for example, has a cash reserve that is much larger than Pacific Ethanol's current market cap of $205 million, making it a prospective suitor with the ability to pay a premium over the current market price. While Pacific Ethanol's historic volatility does not make it an appropriate investment for all investors, those with a high-risk tolerance could see large gains in 2016 over the current price.
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