Wednesday, May 17, 2006

PEIX Pacific Ethanol insider sales, awfully familiar

Insiders at Pacific Ethanol (PEIX) are selling lots and lots of shares. However the insiders at Pacific Ethanol, are insignificant gnats compared to the real masters of inside sales.

Insider sales are excellent sign that a company is overvalued. With Pacific Ethanol trading with a forward P/E ratio of 182.56 and 37.10 times book value. PEIX is overvalued, and the smarter money knows that. Google (GOOG) is cheap at a mere 65 P/E ratio and 10.7x P/B ratio. To visualise the extent of the ethanol bubble, here is a chart of PEIX vs a real ethanol stock.

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