Jim Cramer noticed something very strange happening with energy stocks. The price of oil dropped 6 percent, and yet, SunEdison, one of the world's largest solar developers, hit a 52-week high on Thursday.
The reason Cramer is so perplexed is that he knows that solar power competes with energy. So, if the price of oil gets hammered, solar then becomes less attractive and economical.
Yet, the price of oil has dropped to $50 from the $80s since October, and SunEdison has rallied 74 percent during the same period. That's the exact opposite of what one would expect.
What the heck is going on?
In recent years, SunEdison has transformed its business from supplying silicon wafers to the solar and semiconductor industry to being both a full service solar energy provider and an investor in a huge pipeline of projects.
"It's worth pointing out that, contrary to what you might expect, the price of oil actually doesn't have much of a correlation with the price of electricity here in the United States," Cramer said.
In fact, approximately 1 percent of residential power comes from petroleum. And despite natural gas also being very cheap, the price of electricity in the U.S. does not have much of a correlation either. Yet. most solar stocks have been slammed during the time that oil has plummeted, except for SunEdison.
Cramer pointed out that the real key to SunEdison's success is the business structure. Last May, SunEdison spun off a portion of its legacy semiconductor wafer business. That allowed SunEdison's main solar business to be valued without the semiconductor portion holding it back.
Then in June, the company created a YieldCo vehicle called TerraForm. The vehicle was designed to own the solar-power projects that SunEdison builds and then use the cash to reward investors. Essentially, the company has become a cash machine raising money through its solar business and investing in its pipeline in TerraForm.
"The strength in this stock is a testament to the idea that corporate breakups can make you a fortune," the "Mad Money" host said.
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Ultimately, Cramer thinks this stock has been roaring because of its brilliant structure. It can roll up the solar and wind power assets, and then build huge projects all over the world. He considers it to be an "energy colossus."
The good news is that Cramer also thinks this stock has plenty more room to run. So, while all of the other solar stocks could be getting burned from the low price of oil, Cramer thinks this solar stock is the one to own.
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