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October 25, 2007 Stock Pick: Xethanol Corp. (XNL)

Stock Price: $0.63 (short-term)

Xethanol Corporation (XNL) is a company committed to the production of ethanol and related products in manufacturing facilities close to major urban markets for those products, using locally available raw materials.

XNL has grown revenue from $0.38 million in 2004 to $4.30 million in 2005 to $11.0 million in 2006. 

XNL uses biomass (organic waste material) to produce ethanol. Biomass is available in large, cheap quantities in populated urban and coastal areas allowing for a large central processing facility. This cuts down on transportation costs and increases profit margins for XNL.

Theoretically, XNL can produce ethanol cheaper than ethanol producers using corn. The demand for corn is increasing due to ethanol production and driving up corn prices.

XNL has a market cap of only around $18 million. As of June 30 of this year, the company had over $18 million in cash and marketable securities. XNL has an extremely clean balance sheet.

XNL is starting an uptrend towards its 50-day moving, currently at $0.78. We believe XNL can break through its 50-day moving average in the short-term as it continues to move towards the current stock price.

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