Mad Money

Recap of “Mad Money’:

I’m not recommending any of these stocks, but here is a quick analysis on Cramer’s take on today's ethanol play.

Today Cramer recommended MGPI as a strong buy. Cramer’s reasoning for choosing MGPI is its ability to convert cellulose to ethanol, a futuristic way in producing Ethanol, far more productive then producing it agriculturally(Xthn.ob specializes in the same thing.) Also the fact that gas prices have sky rocketed and ethanol demand has increased has boosted the demand of this company. This can be said though for every and any company in the Ethanol sector, which makes it a very broad reason for a specific company to succeed. Cramer also said that ethanol is the king of pander power, meaning "they have so much political appeal that politicians will keep plugging them no matter how economically unsound the idea may be", which can also be associated to MGPI's high demand. Looking into MGPI's news, it hasn't released anything of recent, so the reasoning this company has been going up is based on pure speculation.


Today MGPI looked very impressive, whats the reason? especially having a high jump in after hours, possibly due to the pumping by Cramer. .



Last Trade:

27.40 6:40PM ET

After Hours Change:

Up1.50 (5.79%)

Today's Change:

Up2.84 (11.56%)

Cramer also noted in today’s show that the transportation of ethanol is a problem which needs to be solved, since pipelines can’t be used due to corrosion. He believes the best way to transport ethanol around the country is by train. A company which specializes in this, in transporting fuels, is Union Pacific (UNP). He recommends a strong buy in this as it can solve a major problem in shipping ethanol, as majority of it is made in the midwest.


As long as these companies are not backed up with lucrative financial statements, as I said with the fundamentals, their futures are unpredictable, the everlasting question is how much longer can they ride on this speculation? Ethanol is a great opportunity for the future, but how can they make those disbelievers into believers if word of mouth is what is driving these companies?


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