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Cramer: Energy play that mitigates volatile oil

If you're looking to leverage the energy renaissance underway in North America, but worry about swings in commodity prices, Cramer has an idea for you.

"I'd take a look at Magellan Midstream Partners," Cramer said. That's because the fortunes of this company aren't tethered to margins generated by the spot price of oil.

Instead, Cramer explained that Magellan is a pipeline operator that generates the lion's share of its business from fees charged for access to its pipelines.




Bariscan Celik | E+ | Getty Images

"The bulk of Magellan's business comes from transporting refined products like gasoline and diesel. They have 9,500 miles of refined product pipeline, along with 54 terminals and 42 million barrels of storage," he said.

And although you might worry that lower oil prices might lead to clients negotiating lower rates, Cramer doesn't think that's likely. "We have a serious shortage of pipeline capacity in this country, the company has tremendous pricing power," added Cramer.

Of course, pipeline stocks raise the question of growth. In this case, Cramer thinks the company is growing in all the right places.

"75 percent of the company's expansion spending is going toward oil projects, with Magellan particularly focused in the red-hot Permian Basin," Cramer said.

And, as a master limited partnership, Cramer says the payouts are impressive. "Magellan plans on increasing its payout by 20 percent this year and raising it another 15 percent next year."

Also Cramer added that he wouldn't be surprised if the company increases their payouts down the road. "Magellan has a long history of raising its distribution, something they've done for the last 48 consecutive quarters."

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All told, Cramer thinks there's a lot to like.

Of course, with shares already 31 percent higher year to date, Cramer is reluctant to chase this stock.

"Ideally I'd like to wait for a pullback at these levels, as the stock's currently only about a point and a half off of its all-time highs, but it's been such a consistently terrific performer that I don't know how much of a pullback you'll actually get."




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