Stratos Renewables' Intelligent Ethanol Plan  We mentioned a few days ago we had an exciting small cap stock idea on the way. Well, today's the day we're revealing an idea we believe may provide significant returns to investors over the next twelve months. This Company is in the development stage of doing something very few other ethanol-oriented companies have, which is produce ethanol in a manner that's cost effective, energy-efficient, and more than anything else, profitable. That's everything an investor could ask for in the alternative energy space, which we all know should garner tremendous attention in coming months with the new administration taking office soon. Here's the deal ... ethanol itself isn't a bad idea; it's actually a great idea. The industry's just been so twisted here in the United States (by politics and misdirected technologies) it's very difficult for anyone - except a handful of blenders who receive subsidies - to make any money in the business. Worse, there's not a whole lot of energy gained by using corn to make ethanol.  The solution is simple - produce ethanol outside of the United States, with something besides corn. The political problem is negated altogether that way, and the creation of ethanol is considerably more efficient when a plant other than corn is used. Best of all, the company we have in mind not only has plans to do everything we just described, but a geographical quirk means it would be impossible for a competitor to copycat their operation.  We suggest you put Stratos Renewables Corporation (OTCBB: SRNW) on your primary watchlist today. In our opinion, a solid execution of their near-term growth plan could jump-start a great deal of fiscal success for the Company. Some of the key reasons for our strong interest follow.    Overview Based in Peru, Stratos is a development-stage sugarcane ethanol producer. There's a major difference between Stratos and other ethanol companies though. Stratos' profit margins should be huge, partly because they'll own the whole operation from start to finish, and partly because government subsidies and/or restrictive import tariffs aren't getting in the way of doing business. Stratos is the biggest land controller in Peru. They've signed a 99 year lease on 24,000 hectares of prime farm land close to the coast, and they're in talks to add another 24,000 hectares in the very near future. That much land can grow enough sugarcane in a year to produce up to 180 million gallons of ethanol. And yes, there's more than enough of an ethanol market to find customers, especially given that Stratos' ethanol costs about 40% less to make and ship to the United States than it does to make it here at home. Just for perspective, the Unites States consumed more than 6 billion gallons of ethanol last year. By 2012, the world will need more than 12 billion gallons per year. By 2020, it's estimated the world will be consuming 50 billion gallons of ethanol per year.  In other words, the market's plenty big enough for Stratos' future operation to be lucrative for its investors.    Competitive Advantages Stratos Renewables is getting positioned for fast and long-lasting growth, and could prove to be a major disruption to the current ethanol industry leaders. Moreover, there's practically nothing their competition can do about it - two of the four advantages are solely based on geography.  Geography  Brazil is well-known for its positive impact on the sugarcane ethanol industry. The plant simply grows well there, and they can produce a lot of ethanol because of it. In fact, 60% of the country's automobile energy needs are met with ethanol, and ethanol is 35% to 40% cheaper than gasoline in Brazil. You'd think Peru, being just west of Brazil and in the same climate, would be able to grow sugarcane at about the same pace Brazil does. As it turns out though, the two countries experience very different weather patterns. Brazil has a rainy season that effectively allows sugarcane to only grow about six months out of the year. Peru has no rainy season, and can grow sugarcane year-round.  In short, Peru can annually produce 144 tons of sugarcane per hectare; Brazil can only produce about 90 tons. Thus, on a square-footage basis, more ethanol (and therefore more money) can be produced from Peru's higher yields.  Propinquity to Ports  Being close to a seaport may not seem like a big deal ... until you need to export something by boat. Then all of a sudden the shipping expenses can really start to add up. Fortunately for Stratos, all that land they're farming is very close to Eten Port, which will be used to load the tankers carrying ethanol to their customers. It's not just easy access to the ocean that makes life easier for Stratos though. The land they're going to be farming is also expected to be easy to irrigate, and the long range plan is to set up multiple ethanol production plants in locations that will be very accessible to any of those 48,000 hectares.  Export-Friendly Relations With the U.S.  You know what it costs Brazil in import duty to sell a gallon of ethanol in the United States? It's 54 cents. It costs Brazil $1.18 to make the stuff, and roughly another 15 cents to ship it. Assuming they pass all that cost on to the buyer, they'd have to charge $1.87 per gallon to break even. The problem is, American producers can make the stuff and sell it for $1.70 a gallon. So, Brazil is effectively shut off from the American market.  You know what Stratos expects their cost to be to make a gallon of ethanol in Peru? About 85 cents. You know what the U.S. charges Peru as an import duty on ethanol? Zilch. Nada. That's right - Peru's free trade with the U.S. makes it easy to export ethanol profitably, which brings us to the fourth and final competitive edge...  Pricing/Cost Power  The fourth key advantage is actually the culmination of the first three ... incredibly low costs of production, which could give Stratos a very wide margin. This may potentially be used to give the company a pricing edge, but frankly, they don't need it -the going rate for ethanol is the going rate, no matter what the underlying cost is. Between the 85 cents it costs Stratos to make ethanol and the 15 cents it costs them to ship it to the United States, their total cost is $1.00. However, ethanol is currently priced at $1.70, and is apt to move higher before lower. That 70 cent difference would be pure gross profit for the company, and ultimately, the company's shareholders.   Growth Opportunity  With 61 million common shares outstanding, and a current share price of roughly 80 cents, the company's market cap weighs in at about $50 million, plus a few preferred shares.  The company anticipates another round of financing before the end of this year. That money will be used to complete a still that will go into ethanol production in the second quarter of the coming year. This facility will be capable of producing 45 million gallons of ethanol per year ... about $76 million worth. Once that still is up and running, Stratos is going to raise more money to add additional stills of the same size - 45 million gallons per year. By the end of 2014, their capacity should be 180 million gallons per year, which will fully utilize 48,000 hectares of farmland. More important to investors, assuming ethanol remains priced at $1.70 or higher, this will translate into at least $300 million of revenue. And remember, Stratos' cost per gallon is expected to be $1.00 no matter how expensive ethanol gets. The gross margin on 180 million gallons would be at $120 million, if not more. Higher ethanol prices would mean even more profitability.  This is a relatively new stock issue, and as such, volume may seem light so far. We attribute that not to a lack of liquidity, but entirely to the newness of this opportunity to American investors. As the story proliferates, we expect trading activity to grow. And, as the company progresses through it growth plan, the stock should also come along for the ride. Stratos' full potential will likely be realized by long-term holders, but we can foresee multiple entry and profit-taking opportunities between now and then. For those speculators who choose to enter into a position now, we suggest an entry level of under 85 cents. A stop of should be adequate, and it's possible we could see the stock move to as high as $1.70 as the idea is made known to the market. So, you may want to use that as your short-term target.  Our primary opinion of Stratos' potential is as a long-term one investment though, so we'll hold off on any official trading specifics for the time being. As the company works through the business plan and gets closer to the end-goal, we'll be able to develop detailed target parameters. No matter which camp you're in though, we recommend you at least put SRNW on your trading radar. This stock may end up being one of your bigger winners for 2009.