The last two bull markets Cramer would be in if he were you are oil and gas and minerals. The stocks in oil and gas have already had a tremendous run, so finding a play that hasn’t been tapped out is hard. But he’s still bullish on Halliburton, which is 12% down from where it was this time last year. That means there’s room to run, especially considering the robust outlook for oil and gas domestically and the company’s international growth.
The cheapest company on the oil side is Royal Dutch Shell, which carries with it a dividend yield of 4%. Cramer says that with oil at $60 and change, RDS can earn $6.55 a share and therefore deserves a much higher multiple than the 10 times earnings it has now.
As for minerals, it’s all about Freeport-McMoRan, Cramer says, because it’s got the two you want: copper and gold – copper because it’s in short supply and gold because it’s a hedge against inflation. The high demand for minerals has Cramer thinking this nine multiple stock could be at 12 before long. The company reported a poor number last number because of strikes and the cost of the Phelps Dodge deal, but it should be back on track this time around. Now could be your chance to get in before it resumes its massive growth.
The runner up for the minerals category is Lundin Mining , Cramer says, but only when the Tenke mining deal closes at the end of June.
Jim’s charitable trust owns Freeport-McMoRan and Halliburton.
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