Trading the Exxon-XTO Energy Deal
Cramer doesn’t believe in arbitrage. Once a deal’s been announced, he immediately looks for a new profit-making opportunity. That’s why on Monday, as much as he likes Exxon Mobil’s $41 billion bid for XTO Energy, he steered Mad Money viewers to another natural-gas name: Clean Energy Fuels.
It isn’t news to say that Cramer’s a big proponent of nat gas. He’s been trumpeting the cleaner fossil fuel’s virtues on the show for a while now. Not only could it serve as a bridge to renewable energies from dirty oil and coal, but also the US is sitting on a ton of it. In fact, we could conceivably be called the Saudi Arabia of natural gas. As a result, its mass adoption could help to reduce the trade deficit, as the US would import less crude, and a build-out in nat-gas infrastructure would create much-needed jobs.
Before today, Cramer seemed lonely in his natural-gas crusade, but now Exxon has endorsed it. The company “sees the writing on the wall,” he said, “and knows that it’s going to need natural gas as a part of its filling-station repertoire.”
And that leads us to Cramer’s newest trade. If nat-gas fueling stations are the future, then investors might want to speculate with Clean Energy Fuels , which, as of Dec. 31, 2008, owned and operated 176 stations across the US and Canada. The stock’s up 45% since Cramer recommended it on Aug. 11 at $9.46. But with Exxon stepping into the space, he thinks CLNE “could go much higher.”
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