Election's Big Winner Is Coal: Cramer
Let others pontificate on whether the president will swing a petulant, defiant left or a conciliatory right. The media and blog pundits can have all the fun they want speculating on the impact of the Tea Party, or lack thereof. We will hear endless commentary on winners and losers.
I could care less.
I know who the biggest winner was last night.
Coal.
Coal put its money on the right people. They made some solid investments in people like Roy Blunt of Missouri, Joe Barton of Texas, NickRahall of West Virginia, Ohio's Rob Portman and West Virginia's Joe Manchin. All received sizable donations from the industry. All won big.
That's on top of the $300,000 the mining "interests" gave the political action committee of John Boehner, the speaker-elect from Ohio. (All according to the
New York Times
.)
I can't think of anyone who cleaned up as well as dirty coal last night.
When you are thrust into the limelight on TV, the Web, radio, print, whatever, and asked about the impact of the election it's always a troublesome moment because they want big sweeping statements so they might have you back or give you more airtime next time. But if you have enough airtime and you have enough ink already, cyber or otherwise, it's a great opportunity to stop with the sweeping macro nonsense that isn't going to happen. It's a delight not to have to create wisdom about the tectonic shift in government.
It pays just to say "OK, go buy" and leave it at that.
So, go buy
Peabody
(BTU) - Get Report
.
Here's why: Gridlock may be a recipe for getting nothing big done, but the people coal put their money behind have a simple to-do list, a simple favor list, and that's to get the Environmental Protection Agency to back down so the coal companies can make more money.
Oops, wait a second. I didn't mean to tell the truth so starkly. There's always a way you can justify taking coal's money and being thoughtful. In this case, the pols always say the EPA will cost us jobs and hurt our domestic security if it cracks down on coal. Unfortunately, any rigorous analysis would tell you that isn't true.
First, if we close coal plants we have to build new plants and new plants put more money to work than just using old coal plants. Second, the new plants would most likely run on natural gas and the natural gas industry would hire more people in a few months than the declining coal industry could put to work for years and years if the nation switched baseload fuel sources.
Finally, domestic security isn't on the line as we have as much domestic natural gas as coal.
But it sounds good.
The investment coal made in these politicians will allow them to pressure their new representatives and senators into cutting back funding for the EPA and in heckling the EPA and wearing it down so it doesn't do its job minimizing pollution that comes from coal. Recently Brendan Gilfilian, an EPA spokesperson, told the
Times
, " EPA does not have a problem with coal, or any other industry." Pretty funny; of course it doesn't. It's coal that has a problem with the EPA. You can't buy the EPA, which is a shame for the coal industry because it would be a lot cheaper. But you can buy "mindshare" with these senators and representatives.
Now, why BTU and not the others? Money can't do miracles. The pols can't call in the EPA and say, "Look the other way with coal." That won't fly because in the end we have a bit of democracy in the country still. There is a degree of agency independence with the Democrats who run the EPA. But, they can pressure the EPA to see it coal's way from the point of view of continuing to allow cleaner coal to be burned. That's a decent compromise. Plus the EPA can still go after the more egregious environment-destroying coal companies -- degrees of hell so to speak -- which means cracking down on mountaintop mining.
Who has the cleanest coal? Who creates the least mountaintop destruction in extracting coal?
Why Peabody does.
Peabody was already doing a blazing hot business with China going into the election courtesy its Australian operation. But these crucial investments in Congress are worth a lot more than crucial investments in mining equipment for Peabody.
The coal industry's dollars could directly impact BTU's bottom line.
That brings me back to the first precept of investing. Almost every single piece of claptrap I have read about what will happen in the market because of the election is wrong because almost none of it impacts what drives stocks -- corporate earnings.
Except this coal investment.
I think that it could bump BTU's $4.57 estimate by as much as 50 cents in more business here, a combination of less inspection and more pressure to use cleaner burning coal rather than shut down plants which had kept a lid on BTU's numbers.
Let's say BTU earns $5. The best energy growth name selling at less than 15 times earnings? Seems silly.
Raising numbers on BTU. Taking price target up to $75.
Now there's Washington to Wall Street for you.
At the time of publication, Cramer had no positions in the stocks mentioned
.
Jim Cramer, founder and chairman of TheStreet.com, writes daily market commentary for TheStreet.com's RealMoney and runs the charitable trust portfolio,
. He also participates in video segments on TheStreet.com TV and serves as host of CNBC's "Mad Money" television program.
Mr. Cramer graduated magna cum laude from Harvard College, where he was president of The Harvard Crimson. He worked as a journalist at the Tallahassee Democrat and the Los Angeles Herald Examiner, covering everything from sports to homicide before moving to New York to help start American Lawyer magazine. After a three-year stint, Mr. Cramer entered Harvard Law School and received his J.D. in 1984. Instead of practicing law, however, he joined Goldman Sachs, where he worked in sales and trading. In 1987, he left Goldman to start his own hedge fund. While he worked at his fund, Mr. Cramer helped start Smart Money for Dow Jones and then, in 1996, he founded TheStreet.com, of which he is chairman and where he has served as a columnist and contributor since. In 2000, Mr. Cramer retired from active money management to embrace media full time, including radio and television.
Mr. Cramer is the author of "
Confessions of a Street Addict
," "You Got Screwed," "Jim Cramer's Real Money," "Jim Cramer's Mad Money," "Jim Cramer's Stay Mad for Life" and, most recently, "Jim Cramer's Getting Back to Even." He has written for Time magazine and New York magazine and has been featured on CBS' 60 Minutes, NBC's Nightly News with Brian Williams, Meet the Press, Today, The Tonight Show, Late Night and MSNBC's Morning Joe.
