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TheStreet.com TV Recap: The Corn Cartel

TheStreet.com Staff

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.

Transocean (RIG) -- which Cramer owns for his charitable trust, Action Alerts PLUS -- "is generating too much cash to be a public company," and Cramer said he's surprised a private-equity firm has not stepped in.

If people think there's a cyclical peak in oil, then they should sell Transocean, he said. "I don't believe that. I think Baker Hughes is just not a good operator.

"Transocean is not levered to the Gulf; it is levered to the rest of the world, and that's what's important," Cramer continued. "The ones that are not doing well are levered to this country and to Canada. The ones that are doing well are levered to the rest of the world."