After this segment, you
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Round picks
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JJC:
With Cramer-fave coal
stocks,
Peabody Energy Corp. (BTU)
and
Arch Coal Inc. (ACI),
just pulling back from
their 52-week highs, with
the Dow flirting with
multi-month lows... I
think the market may be
trying to tell us
something. I think it's
trying to tell us that
coal is going to be bigger
in this country than any
environmentalist would
want it to be. And that's
why tonight I want to talk
about the chimera of clean
coal. Why do I call clean
coal a chimera... not to
confuse it because some
people think it's the
"shimera"... It seems like
many politicians in this
country from John McCain
to Barack Obama think we
are on the verge on an era
of clean coal technology.
Somehow, just a few more
bucks and we had it...
McCain yesterday called
for spending 2 billion
dollars a year to making
coal a reality... and
Obama's touted to
supporting $200 million in
funding for clean coal as
one of his legislative
accomplishments... Don't
they all seem to think
that we're close?... That
this kind of money would
make a difference?... From
where I'm standing,
though, that just isn't
true. You can no more get
clean coal than you can
get this stuff off my
hands.
. . . .
.
You see, I don't think the
politicians are lying... I
think they are clueless. I
doubt they've checked with
any of the companies that
might actually be making
clean coal technology to
see if it's feasible any
time soon. It reminds me
of how it's just like how
they didn't check with
Tyson foods or any of the
other food companies
before they passed the
ridiculous ethanol
mandate, that caused 3% of
gasoline to be made by 30%
of our corn crop... and
then skyrocket the price
of everything from chicken
to cattle because of it.
See, these politicians
just don't seem
interesting in existing
incremental solutions.
I've been thinking a lot
about it and I think that
what they are, frankly,
are victims of what I call
magical thinking... That
if they invest enough
money, they'll come up
with some perfect clean
coal solution... like it's
some sort of baby wipe...
. . . .
.
A clean coal solution
sounds really cool doesn't
it?... But let's be
real... it won't be viable
for years and years and
they don't seem to want to
get their hands dirty with
the nitty-gritty stuff,
the stuff that companies
do to solve problems, the
companies that we like in
Cramerica. See, those
little incremental changes
just aren't grandiose
enough for the
politicians. I think clean
coal, if not a chimera, is
at least an enigma... it
seems to have a lot of
people in this country
very confused... We're
going to end that
confusion in tonight's
show. Right now we have
the technology to clean
the sulfur, clean the
nitrogen, and clean the
mercury emissions out of
coal... should be enough
right?... uh, uh...
Because we don't have, and
aren't close to... the
thing that's so important
to everyone: the
technology to get rid of
carbon dioxide emissions
from the coal... or any
cost-effective technology
for truly doing that on
any wide-scale system...
it's years and years and
years away... years. Now,
no politician would admit
that... we're telling you
it's true. Okay, what's
our edge?... What's our
axe?... We do research. So
tonight I'm going to do
two things. I will explain
my understanding of the
technology we have and
what's on the horizon...
And then I'm going to give
you two companies that I
believe have the best
incremental technology for
not clean coal... that's
not going to happen...
forget clean coal. When
they say that what's known
as deko's underneath,
those little yellow
things... doesn't know
what he's talking about...
doesn't have a clue...
okay? We need that. That
thing right there...
doesn't have a clue. These
people have no clue. Or
how about: Cramer has
clue. Alright... alright
anyway... Perhaps truly
clean coal will happen
sometime in the future
but... lies, lies... Now,
the two big established
technologies that I know
of right now for cleaner
coal are called Flogas
desulfurization, and
people use the symbol...
the acronym FGD. These are
scrubbers, okay? Giant
scrubbers, and they...
what they do is clean the
coal... the emissions. And
then there's another thing
called Circulating
Fluidized Bed Technology,
and that's CFB... And
that's from the boilers...
so boilers, scrubbers...
okay? The best scrubbers
remove 95% of the sulfur
dioxide from coal... The
best boilers get rid of
around 90% of sulfur
dioxide and a lot of
nitrogen oxide. These
aren't getting rid of
carbon dioxide... that's
true clean coal... No,
forget it. Lies, lies,
lies. They're the
technologies that prevent
from dirtying up our
air... but they don't stop
global warming. And
they're where the money is
right now, despite the
politicians insisting that
well, it's just a few more
bucks... here, we'll just
take this money, right?...
and suddenly this will be
turned into clean. No!...
Technologies like
carbon... sequester...
which is what
Duke Energy (DUK)'s
working on... Forget it...
it won't be ready for
commercial deployment
until at least 2012.
. . . .
.
How about Oxycoal?...
That's another one we keep
hearing, right?... That
gets rid of a lot of CO2
emissions from coal...
deep development... it's
just not that feasible.
Maybe not even feasible
within 10 years, despite
what the politicians are
telling you. And since we
know we got to use coal,
because we got a lot of
it... We have to look at
the companies with the
best scrubbers and
boilers...okay? The ones
that can give us cleaner
coal... not clean coal.
Cleaner coal... coal can
not be clean. Maybe one
day it can be... but it's
fiction right now. I've
got two new technology
clean coal stocks. And
because I'm a tease, I'm
going to save the best one
for after the commercial
break... that's a company
that's going to live or
die by alternatives... so
it's completely devoted to
finding better
technologies for cleaner
coal and other forms of
technology. The first one
is a stock that I have
been buying endlessly for
my charitable trust and
why I constantly tell you
to buy it. It's the
infrastructure and
technology fave, Foster
Wheeler. That's why we
always talk about it here.
FWLT. See, this company is
making cleaner coal right
now. At the same time
that... let's contrast
this new tech of FWLT with
some of what we think
about old tech. It's
always helpful, I think,
to contrast them. New
tech, FWLT is trying to
make cleaner coal... "Old
Tech," take two, is trying
to develop cleaner kills,
in Grand Theft Auto 4...
Which is more
important?... Grand Theft
Auto 4, and killing people
better or actually trying
to clean coal?... I'll
tell you what I think.
It's time to recognize
that the best old tech
companies... all they're
trying to do is stop
hackers... or make
mediocre sales-people hit
their Dunder-Miflan (i.e.,
reference of fictional
paper company in NBC's
sitcom, The Office)
stretch targets. It's just
remarkable how bad and
irrelevant Silicon Valley
is... If new tech plays
like FWLT, decided to
start focusing on video
games and costumer
retention software and
faster telecommuting
instead of cleaner coal,
we'd deplete the ozone
layer overnight. Back to
FWLT. Our first cleaner
coal play. The company is
a leader in these coal
fluidization boilers...
the ones that are designed
to remove 95% of the
sulfur dioxide from coal.
They've sold 300 of these
worldwide. According to
management, they're
working on... I've looked
at the research papers on
the website,
www.fwc.com... yeah, I
read the research papers
because I lead a really
exciting life... They're
working on the first
super-critical boiler that
runs at a higher
temperature with more
efficiency... that might
reduce some carbon
emissions... that's the
incremental technology the
politicians should be
talking about. FWLT also
has an alliance with
Praxair Inc. (PX),
another stock we like, to
develop an oxy-coal
combustion technology
that's being tested in New
York. That's real clean
coal with lower CO2
emissions. But right now,
it's the boilers that are
making the money. You got
an opportunity in FWLT...
its stock isn't flying
here... and partly because
the company said that its
North American boiler
orders were getting
dragged out, causing a
sell off... A lot of that
is because the politicians
want to agree to a
standard. We brought their
CEO on the show back, May
7th, Ray Milkovich...
Okay, the stock was at $65
bucks, everyone was all
worried and stuff... He
reiterated the company
outlook, the stock just
moved 14%... I don't think
it's done. FWLT only
talked about two instances
of delays... said this
meant nothing for
2008-2009 earnings... You
know we've been backing
the stock for... I mean
it's like what we feel for
the fertilizer stocks...
besides, there seems to be
a lot of other great
things going on at FWLT,
as long as oil prices keep
staying higher. Its
engineering construction
group should remain
strong... And as energy
demands expected to grow
40% between 2005 and 2030,
we need these guys for oil
and gas infrastructure,
powerplants and especially
liquefied natural gas...
Which, according to FWLT,
is going to increase
sharply from 8.7 billion
in 2006 to 25.4 billion in
2011... that's actually a
small time frame. FWLT
builds the LNG facilities.
Everyone's worried about
China putting in a tower
for oil... making so its
not subsidized... Forget
that. This is about the
big solution. So what we
have here is a company
that's helping to make
cleaner coal, maybe
eventually clean coal,
with a lot of great energy
structure businesses that
have been on fire. What's
not to like?
. . . .
.
The Bottom Line!:
FWLT* is our first play on
cleaner coal. Forget the
lies of clean coal. So I
want you to stick with
Cramer after the break if
you want to know our
number 1 cleaner coal
play, and believe me,
you're going to want to
know what it is.
. . . .
.
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JJC:
Tonight we're talking about... not
clean, but cleaner coal... the
feasible, realistic alternative to
the clean coal technology that
many of our politicians seem to
think is well within our grasp?...
Wrong.
In the polls, the pols are being
totally bogus, or they just don't
have a clue... because while we
have the technology to make coal
less noxious... we're not there.
There's not a lot we can do with
new technology to release carbon
dioxide emissions any time soon,
no matter what they say. That is
with the possible exception, and
it's small... but the possible
exception of my number one
cleaner, not clean coal, cleaner
coal, play.
And that stock is
McDermott International Inc.
(MDR).
Buy, buy, buy!
. . . .
.
This one, along with
Foster Wheeler (FWLT*),
which I just recommended, I think
will be among the biggest gainers
of any stocks away from wind and
natural gas, which went down
today, and you should be buy, buy,
buying... Because in my view,
these stocks, MDR and FWLT, truly
are the ultimate new technology
companies. They solve the mankind
problem of dirty air. At the end
of the day, old tech is truly
about the transformatory nature of
getting our children to stop
reading newspapers and magazines,
and instead play really exciting
video games like Army of One, Halo
3, need for speed... See, I'm in
touch with the younger demo...
especially so for a 63-year-old,
like myself... It would be
suiting, wouldn't it be, if old
tech were promoting dirty coal as
a way to power the Xbox... I mean,
that's how irrelevant and
wrong-headed Silicon Valley is,
alright? Now, back to MDR, or
Murder, we used to call it murder
because on the trading desk,
because its symbol is MDR... Hey,
I'll take one-hundred thousand
murder... From what I know, this
one represents the absolute best
hope not for clean coal, like the
politicians lyingly tell you...
but cleaner coal. And I'm going to
tell you why. MDR's life depends
on coming up with cleaner coal,
because it makes so much of its
money from building, supplying and
retrofitting coal plants. If it
can't develop the technology to
make cleaner coal, something its
already well on the way to doing,
this company is sunk. So, MDR, is
the one with the best, cleaner
coal technology. MDR is a big
player in making those FGD
scrubbers I talked about, the
Coal-fluidization bed boilers, the
technologies we need to take
sulfur, not CO2, sulfur, out of
coal, so it doesn't pollute the
air we breathe... Of its entire
power business, which includes
both coal and nukes, MDR tells us
that scrubbers make up about 35%
of MDR's backlog, parts and
services for existing coal boilers
make up 30%, new boilers make up
20%... and nuclear, which we love
on Mad Money, makes up the
remaining 15%... You see, these
guys are the coal clean company,
cleaning coal. MDR has 2.4 billion
in unbooked bids outstanding in
its power business, mostly from
scrubbers and selective catalytic
reduction systems, which remove
the nitric oxide from coal. Coal
has so many bad things in it, you
can see why the environmentalists
hate it... But MDR and FWLT are
cleaning it up.
. . . .
.
This company's power business is
about coal, coal and more coal.
That's why I'm saying that MDR is
in a life or death match... they
are in the true claymation death
match. Alright, they need to make
coal clean enough... otherwise the
business goes kaput. MDR does have
two ways to reduce CO2 emissions
from coal and not in the distant
future, like some of the clean
coal technologies our politicians
have laughingly embraced. MDR is
developing super critical boiler
technology that could reduce CO2
emissions from coal by, here's the
number, this is what can really be
done. The reduction of CO2 can be
12-15%, they can reduce it 12-15%,
while also increasing the
efficiency of the power plant
that's using it. Now I want you to
notice, we can't make cleaner
coal, we can cut emissions down,
of CO2, by 12-15%... that would be
a major improvement. But that's
the practical goal, not the 100%
politicians tell you we have if we
just spent more money. Money won't
matter. We can throw all the money
out in the world, we can't get it.
. . . .
.
MDR also said something great in
its last conference call. Their
CEO made the point that if we
just, we really want to clean up
the air, we just shut down a lot
of the old coal plants in the 50s
and 60s that were still running
and replace them with the current
version of plants, using new,
efficient super critical boilers.
That would immediately reduce
carbon emissions. That makes
sense, doesn't it? But before this
could happen, Washington would
need to have something on paper.
They would need to produce a
legislative mandate on reducing
carbon emissions. The politicians
haven't been able to do that. The
cap and trade plans that both
Obama and McCain support might
have... you need to do that in
order to get the utilities to shut
down their old plants and build
new ones... they have no incentive
right now. I really think that a
new president, either guy, might
break the log jam and work to
create coal standards... so the
utilities can start building coal
plants, and then we would reduce
CO2. Right now, I think that the
companies are logically afraid.
They're afraid they'll start
building things and congress will
change the rules on them. When
Texas Utilities cancelled all
those MDR plans this year, it did
so because it was so afraid the
standards might be changed. Any
agreement in Washington will get
MDR a gigantic amount of business.
Until then, MDR is making money
off of those old plants, because
the utilities are running them
longer and harder, that creates
demand for MDR's parts and
services business.
. . . .
.
A lot of MDR's... a lot of the
plants that were forecast to be
shut down, are still running
because we need the power... And
that's MDR bread and butter.
That's giving them tons and tons
of opportunities to make money,
retrofitting these plants... so
it's a win, win either way for
them. For the planet, we'd prefer
lower emissions solutions. Then
there's the other side of MDR's
business. The off-shore
construction bit. Remember
yesterday, in the New York Times,
it said that we don't have enough
infrastructure to drill off-shore.
Infrastructure is MDR. Offshore
infer structure to drill is MDR.
MDR is one of the companies that
builds the offshore platforms and
other offshore infer structure,
which we will need if we ever,
ever are allowed to drill
offshore... That's the president's
plan for offshore drilling. When
you heard that, you should have
been buying MDR. MDR recently
started a joint venture in China,
to build the ships used to support
offshore drilling... Backlog, $5.3
billion. This company really is
something, you know. MDR is...
well you always want a Manhattan
project for energy, right? MDR is
your Manhattan project for energy.
It is a new tech... it is so much
better than the old tech players
that make fast chips that allow
you to beat your opponents at a
really important joust on Guitar
Hero, over Mississippi Queen or
Barracuda.
. . . .
.
The Bottom Line!:
Apparently, our best
hope for cleaner coal,
and offshore drilling,
this one is
twice-blessed... I
think MDR. I think
it's one of the best
buys out there. I
think you'll go right
buying MDR.
. . . .
.
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