Cosan: Sugar Prices Should Remain Strong Through 2011

| About: Cosan Limited (CZZ)

Cosan (NYSE:CZZ) recently hosted its first New York investor day to give Wall Street a closer look at its top management from all its business segments: sugar, ethanol production, fuel distribution.

Key takeaways: Sugar prices should remain strong through 2011 and beyond, while M&A will remain a focus -- although no acquisitions are expected in the long term, the company's entrenched focus on sugar will probably expand into other food categories where it can apply its existing brand.

This Brazilian ethanol producer has drastically transformed its business -- and its balance sheet -- over the last two years, and is now a global investor's primary choice when looking for exposure to either Brazil or the ethanol/sugar ecosystem.

Bank of America Merrill Lynch is re-rating its target multiple for CZZ following the company's joint venture with Shell (RYDAF).

Basically, BofAML thinks that as CZZ streamlines its operation now, it will provide a base for future organic growth and M&A. The fuel distribution venture with RYDAF will unlock synergies, while corporate governance is improving.

This is generally bullish for the company over the long term. CZZ may end up a global powerhouse brand -- and as sugar markets heat up around the world, that could mean a great deal in the long term.

Disclosure: No positions