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CPL: Cramer's Power Trip

Thursday, 3 Apr 2008 | 7:09 PM ET
Brazil's Power Trip
Mad Money's Jim Cramer is betting on CPFL Energia, Brazil's largest privately held power distributor.

There’s nothing better than a natural monopoly – except maybe a natural monopoly in a growing country. That’s why Cramer recommended Brazilian utility CPSL Energia on Thursday’s Mad Money, an idea he picked up from an audience member at the Penn State show last week.

You buy utilities for stability and for yield. As Brazil’s largest privately held power distributor, CPL has both and it’s also tapped into one of the most rapidly growing economies in the world, one that’s chugging along at 5.6% GDP growth. And as Brazilians become wealthier, they’re consuming more electricity than ever. The situation is analogous to the U.S. in the economic expansion years of the 1950s and 60s, Cramer said, giving CPL the stability with a side order of potential growth.

How about the dividend? The stock pays out a 7.8% yield, even better than Cramer’s favorite domestic utility, Con Ed , which gives you 5.8%. CPL also adds customers at a solid 3.5% annual rate, well above any U.S. utility and it’s also planning on doubling its generation capacity over the next few years. Throw in a disciplined acquisition strategy and this stock’s got everything going for it.

Buy it for the growth, the yield, or both. And watch the video to see Cramer take calls on Petrobras , Arris Group and more.


Questions for Cramer? madmoney@cnbc.com

Questions, comments, suggestions for the Mad Money website? madcap@cnbc.com

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