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Buy the Drilling Boom

“The oil-service business is on fire,” Cramer said Thursday, and Weatherford International is the best way to play it.

Last Friday’s Baker Hughes Rig Count number, which is a weekly count of the rigs drilling for oil and natural gas, showed a 28% increase over the previous seven-day period. That’s the biggest jump in 17 years, and the ninth straight weekly gain in nat-gas rig use. This is great news for the oil-service names, Cramer said, which supply these rigs with essential products and services.

That’s one reason why Cramer’s so bullish on Weatherford right now. There’s also the fact that as the oil and gas reserves of the major integrated companies mature, the service firms generate cash by selling the technology necessary to reach hard-to-find resources. And there’s money coming in from overseas as well, as the Weatherfords of the world are brought in to help state-owned oil companies boost their performance.

Cramer said this group has great fundamentals, and he sees the M&A activity there – with Schlumberger in February making a bid for Smith International and Baker Hughes last summer buying BJ Services – as a sign of strength. And while investors could surely go with SLB, a solid performer in its own right, Cramer likes Weatherford’s return potential much more.

Weatherford is the world’s fourth-largest oil-service company, “with the best international contracts” and “the best growth prospects in the business.” The company has a strong presence in the Middle East, Latin America and Russia, and it ranks among the top four in its key businesses: number one in artificial lifts; number four in directional drilling, its fastest-growing and highest-margin segment; number three in completion systems business; and number one in casing and tubing.

Admittedly, Weatherford missed its most recent earnings estimates, but the CEO blamed project delays and severe weather rather than operational issues. And despite all this, revenues still came in better than expected. Cramer said the North American business is stabilizing thanks to the drilling boom in US shales like the Marcellus, and the international assets offer Weatherford great positioning once the drilling catches on overseas.

So who should investors avoid? Transocean . The company just reported a disappointing quarter due to higher costs, and Cramer expects the problem to drag on RIG’s performance for the next few quarters. Also, this is a deepwater driller, and much of the drilling these days is happening on land. So consider Weatherford International instead.

It’s “better, cheaper and [offers] more catalysts,” Cramer said.

Cramer's charitable trust owns Weatherford International.

Call Cramer: 1-800-743-CNBC

Questions for Cramer? madmoney@cnbc.com

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

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