Celanese (CE) Should Capitalize on Record Low Nat Gas - Cramer

June 20, 2012 7:38 AM EDT Send to a Friend
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Price: $58.59 +2.25%

Rating Summary:
    11 Buy, 8 Hold, 1 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 21 | Down: 43 | New: 52
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With natural gas prices approaching record lows -- bad news for producers of the commodity -- not everyone is being negatively impacted from the plunge.

On Tuesday evening's Mad Money, Stock sage Jim Cramer noted Celanese Corp. (NYSE: CE) is actually benefiting from the price drop. Celanese, which makes "building-block" chemicals for other companies, has seen shares drop 27 percent since February, bringing shares well into undervalued territory.

Chemicals like emulsions, plastics, and resins all have a common link: they use tons of nat gas during production. How much is "a ton?" Say nat gas prices move $1 per mmBtu... that would translate to a move of 15 cents to 20 cents per share on the company's bottom-line numbers.

More than just nat-gas benefits, Celanese is also investing in a new Texas facility which should come online in July 2015. Focus of the facility will be methanol production to support current operations, while Celanese will form partnerships for excess methanol it doesn't use.

With Celanese missing first-quarter EPS views by 5 cents per share, Cramer called the company a turn around story. Shares are trading at just 7 times earnings, yet the company boasts a 10 percent growth rate. Factoring in about 30 percent of profits which stem from the rapidly expanding Asian market, Cramer sees Celanese as a bargain.


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