Trouble in Egypt? Buy U.S. Energy Stocks
With the tumult in Egypt and CNOOC’s deal with Chesapeake Energy, is it any surprise that U.S. oil and gas stocks are flying? Cramer doesn’t think so.
Cramer during Monday’s “Stop Trading” said it was “absolutely right” that these companies would see their share prices spike. China’s CNOOC announced Sunday night that it would buy a 33-percent stake in Chesapeake Energy’s emerging oil field in Northeast Colorado and Southeast Wyoming for as much as $1.26 billion. This is the second deal CNOOC recently has cut with Chesapeake, the other being a joint venture worth $2.16 billion agreed upon back in October. That, coupled with the threat of instability in the Middle East, makes these stocks attractive.
Domestic oil-and-gas companies like Devon Energy and Southwestern Energy are “dramatically undervalued,” Cramer said, because they have the ability to “make a lot of money in this environment.”
He also recommended that investors look at coal, calling it “the fastest-growing fuel in the world” regardless of its impact on the environment. These stocks are “just too inexpensive,” he said, naming Peabody Energy as his favorite. Peabody is “the Exxon of coal,” but with better growth.
In the current environment, all of these domestic energy plays seem to be in the sweet spot.
“We are running out of energy around the globe,” Cramer said, “and these companies are making a fortune.”
But for those who want to play Egypt specifically, say, a potential closing of the Suez Canal—not that Cramer thinks they should—they might consider shippers like FedEx and UPS that fly rather than ship their freight. While UPS is up slightly, FDX is “not doing well,” though Cramer called that a “false read.”
Cramer also recommended returning to the recent quarters of Baker Hughes and Halliburton , which he called “unbelievably good.”
“I love the drillers,” Cramer said.
Lastly, with DRAM memory pricings rising steadily, Cramer thinks Micron Technology is a buy. He thinks the stock is “still way too cheap at $10.”
When this story published, Cramer's charitable trust owned Southwestern Energy.
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