Governments of all kinds, whether here in the States or those overseas, may be “the biggest threat to wealth creation that there is out there right now,” Cramer said Friday. Hence his weeklong series on investing themes that are out of reach of even the most powerful heads of state.
So far he has touched on the rising middle classes in Brazil, China and India, and how their growth will transcend any government initiative coming out of Washington, Brussels or Beijing. And he explained how the fight against obesity also is too big to stop. In fact, the US government seems to be fully behind it the push for healthier citizens.
Well, today Cramer highlighted his last supra-political theme: ecological disaster. He thinks BP’s spill in the Gulf of Mexico proves “how impotent government is when it tries to stop environmental destruction.” But the feds still have to pay for the cleanup, and Cramer is expecting similar, though maybe not as bad, events in the future. Already the world’s 3,000 largest companies cause $2.2 trillion worth of environmental damage a year, a United Nations study said, and that doesn’t include any of the pollution caused by the consumption of their goods at the household or individual level.
With the BP disaster front and center, and twice as much oil spilling from its Gulf well than originally thought, Cramer said Clean Harbors right now is the best way to play ecological disaster. CLH, the largest hazardous waste disposal operator in North America, won the contract to clean up the Gulf coastline, which is why the company upped its second-quarter guidance as much as 20% and the stock has run so much.
But while Clean Harbors is up about $10, or 17%, courtesy of the spill, Cramer thinks it is still inexpensive given its 22 multiple and 17% long-term growth rate. That doesn’t mean investors should chase it, though.
“I don’t want you paying more than the low $60s,” Cramer said. “One day the spill will be done, and the stock is going to come down.”
Other than CLH, investors may consider a less direct play like Newpark Resources or plain-old Waste Management . NR ‘s environmental-services division processes and disposes of non-hazardous waste that is produced when companies explore for oil, including collecting waste from offshore areas and inland marches, as well as BP’s current spill. WM, which offers a 3.8% dividend yield, has seen pricing improvement of late, and management expects volumes to turn positive in the second half of the year.
“That’s the [more] stable bet,” Cramer said of WM. “Waste Management is a buy.”
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