Staying Power: Oil
When it comes to long-term bull markets, it doesn’t get much more obvious than oil. Cramer thinks it’s a no-brainer that the oil and oil-service stocks are going much higher. But he wouldn’t be surprised if they got cheaper first. If they do, it’s a perfect opportunity for Home Gamers to buy them hand-over-fist, he said.
If there was ever a time for the price of crude to fall, it’s now, Cramer said. Iran stopped building nukes. Hugo Chavez got “neutered” at the polls. Worldwide growth is slowing.
But none of that speaks to the main issue with oil: it’s running out. No matter how much is drilled, the supply just isn’t there. And Cramer doesn’t expect demand to run dry so long as China and the rest of the developing world are still guzzling.
The best oil play around, according to Cramer, is ConocoPhillips. It is the cheapest of the integrated oils and it has large natural gas reserves, which Cramer thinks is an undervalued plus.
Natural gas has been a dog, there’s no question. But Cramer sees it going higher as people switch fuels where they can, and especially over the winter months when the price almost always increases.
Conoco also has a leg up on its competitors because it doesn’t have as many product-sharing agreements with foreign state-owned oil companies in corrupt Third World countries like Venezuela.
And with management that truly believes high oil prices are here to stay, Conoco is ahead of the curve, as far as Cramer is concerned. The bottom line is that he thinks the bull market in oil is here to stay and ConocoPhillips is the way to play it.
>Click to read about the long-term bull market in defense
Jim's charitable trust owns ConocoPhillips.
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