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Total Profits

Investors have to love it when a stock that should be selling at a premium is trading at a discount. Such is the case for Total, the French integrated oil company.

Comparable European oils like BP and Shell are cheap with their 11.2 times forward earnings multiple. Total is just a hair cheaper at 11.1. Cramer’s point, though, is that Total is a better company than both BP and Shell, so it definitely should be trading higher.

The stock is down six points from its peak of $87, making it one of the few integrated oils trading at a discount. The 3.25% dividend isn’t too shabby either, Cramer said.

A little background: Total does business in 27 countries at both ends of the pipeline – upstream in production and downstream in refining. France enjoys a better reputation in the world than the U.S. does, and that carries over to the business world. As a result, Total gets an interest in projects like the Shtokman natural gas field, where it works with Gazprom. Shtokman holds reserves of 915 million barrels of oil and can pump out 100,000 barrels a day.

Total is the number-one refiner in Europe and Africa. Since a good portion of its business is in diesel, the increased demand for that product is helping refining margins. So are the upgrades the company has been making to handle heavier and sour crudes, which are becoming more prevalent and profitable as light sweet crude prices rise.

Two more things the company has going for it are its large chemicals business and a stake in Sanofi-Aventis . Total held on to the chem division while its competitors were selling. The strategy paid off because the bull market in the sector means it can fetch a healthy price if it decides to sell. If not, it can still reap the rewards from being in that market. As for Sanofi, Cramer hopes Total will sell part of its holdings and put that money into its oil business.

Bottom Line: Everybody wants oil. And if you don’t want Europe, you’ve got your head on backwards, Cramer said. The stock that covers both – Total.

Questions for Cramer? madmoney@cnbc.com

Questions, comments, suggestions for the Mad Money website? madcap@cnbc.com

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