Cosan Reviewed
by Brendan Coffey (Cabot Wealth Advisory) Lately, we’re seeing increasing strength in the shares of ethanol-related companies. Commodity broker Archer Daniels Midland (ADM) has built up its position as an ethanol refiner, building its own plants and buying up other capacity. It’s now the largest producer in the U.S., and is in a position of strength if gasoline prices surge and demand for ethanol materializes. Similarly, second-tier ethanol players, like The Andersons (ANDE), are seeing good relative performance lately, too.
But in this environment, I’m not sold on investing in any U.S. ethanol producer just yet. There are a few reasons for that. Let me talk about the macro ones I believe could drive long-term movement in ethanol.
…Lastly, perhaps the primary reason I’m wary of domestic ethanol stocks is that I expect Brazil will be the most effective ethanol producer. For one, Brazil is the dominant grower of sugarcane in the world, producing about one-third of all cane.
…In this environment, I’m putting the odds favoring a company called Cosan (CZZ), the largest sugar producer in Brazil and also the biggest ethanol producer. The company just signed a deal with Royal Dutch Shell for co-generation and marketing of each other’s fuels in a bid to lay the groundwork for a global ethanol giant.
CZZ has more than doubled in the past year, jumping from 4 to nearly 9, giving it a market cap of $2.8 billion, and it has held up well in the recent market retracement. READ MORE
Related posts:
- Brazil’s Cosan Sees 2010/11 Cane Crush at 58 mln T
- Amyris Signs Letters of Intent Agreements with Bunge, Cosan and Guarani
- EPA Biofuels Rules Must Reflect Respected, Peer-Reviewed Science
- U.S. Renewable Fuel Standards Upend Ethanol Tariff Fight
- Jamaica Seeking to Boost Ethanol Production for Export under CBI
