TheStreet.com TV Recap: The Corn Cartel
By TheStreet.com Staff
2/15/2007 2:11 PM EST
thestreet.com
The new OPEC on the block consists of companies that make their bones with corn -- ethanol production -- Jim Cramer said on the TheStreet.com TV's Wall St. Confidential video Webcast Thursday.
Those companies, which Cramer says have "tremendous visibility," or strong earnings horizons, include Agrium (AGU) , Agco (AG) , Deere (DE) and Archer Daniels Midland (ADM) .
"America is searching for any way to be able to bust OPEC, or any way to be able to provide energy that's not hydrocarbon, so we've keyed on ethanol," he told Gregg Greenberg, the host of Wall St. Confidential. When you have the kind of visibility these stocks are displaying, "you can pile in and not have to sell."
When both the Democrats and the Republicans favor higher tariffs to keep out ethanol from other countries, and when both parties believe this is the way to win the Midwest, "you get visibility to 2009 or 2010," Cramer said.
However, he believes the ethanol focus has taken the agricultural business by surprise, and it needs more capacity.
Greenberg asked Cramer whether Wall Street is more interested in the "juicier" stocks like financials and tech.
Cramer said the money is going out of tech, and believes companies such as Bunge (BG) , Deere, Monsanto (MON) , Landec (LNDC) and DuPont (DD) work in this context.
"These are companies that are perceived to be long-term winners," he said, noting that he's not talking about the companies that actually make the ethanol, like VeraSun (VSE) .
Baker Hughes (BHI) , on the other hand, is a "poorly executed company and is taking down its whole group," Cramer said. |
