Investopedia: Cosan Could Look A Little Sweeter In 2012

Ethanol has a dicey reputation with investors. The petroleum alternative has enticed more than a few true-believing green investors into thinking it's somehow more than a commodity, before dashing their dreams and denting their net worth. Brazil's reputation is scarcely better, as investors have had to ride the ups and downs of a promising, but very volatile, market for years. Combining these two into one investment may seem like lunacy to some, but Cosan (NYSE:CZZ) may be a name to consider for 2012 and beyond.

One of the Biggest, One of the Best 

Cosan is one of the largest sugar and ethanol producers in the world and the largest sugarcane crusher. The company operates 24 mills, two refineries and two ports in Brazil and currently has a little over 60 million tonnes of crush capacity. In fact, about 5% of the world's ethanol comes out of Cosan facilities.

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Investopedia: Rail Traffic Suggests A Slower Pace

It's easy to overreact to month-by-month economic data, so any sort of spot analysis has to be taken with a grain of salt. That said, the pace of rail traffic seems to be resetting to a slower but still positive level. That, in turn, suggests that the recovery may have entered a phase where growth will be less impressive but perhaps enough to strike a favorable balance between the market's need for growth and the fears of an overheating economy. (For background reading, see A Primer On The Railroad Sector.)

The Numbers for March 

According to the Association of American Railroads' (AAR) Rail Time Indicators report, U.S. carload traffic in March 2011 rose 3.4% over 2010 and 2% from February 2011. That shows decent growth, but readers should also remember that bad weather earlier in the year curtailed some traffic at that time. Accordingly, it seems like growth is slowing as the year-over-year comps get increasingly difficult.

The numbers for Canada are different (up 0.9% in March 2011 from last year and up 3.7% from February 2011), but close enough to suggest that more or less the same trends are at work.

Intermodal results were a little different; for the U.S. there was 8.5% annual growth from March 2010 to March 2011 and 0.5% sequential growth since February 2011, while in Canada the respective numbers were 2% and -2.1% over the same time periods. (For more on rail stocks, check out Rail Stocks Chugging Right Along.)

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Note: Please note, due to an error in the editing process, publication of this piece was delayed about two weeks. 

Back To The Future With Ethanol?

This has been a hot summer for ethanol. Prices have been on the march for almost all of this year's so-called "driving season", and actually edged ahead of gasoline for a bit, though gasoline is now on top again. Will this move trigger another round of the "fuel of the future" frenzy and a surge in construction and investment, or is this likely to be just another head-fake in what has been an exceptionally difficult market for investors? 

Why The Move Now?
It is often fatuous to look at a move in a commodity's price and spend a lot of time trying to explain it. Nevertheless, "often" does not mean always. In ethanol's case, it is impossible to look at the move in ethanol prices as somehow wholly separate from a major move in corn over the past year. Although corn prices slid a bit in the first half of the year, they have jumped through the summer and stand at levels not seen since 2008.

On top of that, there is a sizable tax credit to companies that blend ethanol with gasoline. That gives blenders like Chevron (NYSE: CVX) and Valero (NYSE: VLO) incentive to keep adding ethanol to the mix - even in the face of higher ethanol prices. Moreover, since the federal government has no apparent desire to lift the protectionist tax policies that punish cheaper ethanol imports from countries like Brazil (where Cosan (NYSE: CZZ) produces cheaper ethanol from sugarcane), U.S. producers do not have to worry about foreign supply soaking up the demand. (For more, see A Sweet Ethanol Deal.)
 

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AgBank Of China IPO Not As Easy As ABC

Reading about all of the angst and concern about the IPO of the Agricultural Bank of China, I am reminded that waiting for the hammer to fall can be worse than the blow itself. A lot of market-watchers have made this event into an be-all/end-all referendum on the state of China's market. The truth, though, is that the long-term impacts are all but certain to be far less earth-shaking. 

A Big Deal, But ...There is no doubt that the IPO of AgBank is a major event. This is the last major bank in China to go public, it is a very significant lender in the country (particularly in rural areas), and the performance of the stock is going to tell us all something about the appetite for Chinese shares. It is also true that you do not see a $23 billion IPO very often. (For more, see IPO Basics Tutorial.)

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This piece originally had China Mobile named as China Telecom. We'll be getting that fixed soon...

Keep An Eye On Biobutanol

This article actually was originally prompted by something I read in my weekly reading of newspapers, magazines, and journals. I just wish I could remember which one it was... 

Few topics seem to garner as much interest these days as the idea of moving past the gasoline-based transportation economy and onto something better. Several candidates for "better" have risen and fallen in recent years - fuel cells and ethanol seem to be yesterday's news - and advanced batteries are the belle of the "better" ball right now.

Investors should keep an eye out for biobutanol. While there are several significant challenges to surmount before biobutanol could be commonplace, this is an alternative fuel that may actually give us a real alternative when it comes to fueling our cars. That, in turn, could deliver real rewards for companies like DuPont (NYSE:DD), BP (NYSE:BP) and Total (NYSE:TOT) down the line.

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