Finding Money In Greener Pastures

Now that the Supreme Court has forced the EPA to start doing its job, it’s time to think about specific sectors and companies that are leveraged to a cleaner environment. Cramer thinks these stocks should all be going much higher in the near future.

Today he’s focusing on companies that profit from cleaner power plants, whether they are nuclear or just cleaner versions of coal and gas. You can bet that the Green Day decision is going to make power plants cut back on all that carbon dioxide, so you better look at companies that are going to help them do that.

Cramer’s two favorite plays on the power companies cleaning up their act are Foster-Wheeler and Shaw Group . Both companies are engineering, construction and infrastructure plays, although Cramer says Shaw hasn’t been very stable lately. He thinks the Green Day decision will change the equation enough to make it a tempting buy. He’s recommending Foster Wheeler because it’s a play on upgrading our current power plants to run cleaner – and Shaw Group because of its position in nuclear construction, which Cramer admits hasn’t really started happening in the U.S. yet, but is far more likely to speed up with carbon dioxide now public enemy #1.

FWLT is a leader in fluidized bed boilers and circulating fluidized bed boilers, which most people have probably never heard of. Power plants use boilers to burn coal or gas or whatever else they use and convert it into energy. Foster-Wheeler’s boilers are flexible, Cramer says, and can be used to burn biofuels or tires. They also allow power plants to cut sulfur dioxide and nitrogen oxide emissions by 90%, along with CO2. The company also has a hand in manufacturing gasifiers, which we use to convert biofuels and recycled waste into gas. Foster-Wheeler’s got about 40% of the market in these bed boilers, so they’re in an enviable position, Cramer says.

Another reason Cramer is recommending Foster-Wheeler is because he thinks this quarter they will finally have enough equity build-up to move to the New York Stock Exchange. The company lost its spot on the big board after an asbestos lawsuit knocked them out, but with asbestos in the past and the company’s positioning toward cleaner energy, Cramer thinks it could switch back to the NYSE which would help out the stock.

Shaw Group, with its positioning within nuclear power, is Cramer’s other power plant play. From a global warming perspective, Cramer thinks nuclear is the way to go because it doesn’t flood the atmosphere with CO2. Last year, SGR bought 20% of Westinghouse Electric, which is a big builder of nuclear plants. Shaw Group got an exclusive deal to do all the engineering, procurement and construction services on Westinghouse’s plants for the next six years. Westinghouse won a contract to build four of the reactors in China, Cramer says, and Shaw could make a killing off that.

Shaw’s CEO said he expects his company will get contracts for another two to eight plants over the next year, making about $1 billion per reactor – that’s four to five times more than they get from the Chinese reactors, Cramer says. In a post-Green Day world, he thinks nuclear power is going to be increasingly favored, and SGR is a great way to play it.

Bottom line: Cramer can’t believe he’s saying it, but he now believes that cleaner power plants will make you money. Foster-Wheeler and Shaw Group are his picks in the sector.

Questions? Comments?