Cramer: Time to Buy Oil Stocks
Oil prices rose to settle at $99 a barrel Tuesday on a report of a jump in U.S. consumer confidence, an Italian bond auction attracting demand and after an attack by Iranian protesters on two British embassy compounds in Tehran.
U.S. light, sweet crude futures rose $1.58 to settle at $99.79 a barrel, having reached $100.06, but still below Monday's $100.74 high. Brent crude futures rose $1.47 to $110.47 a barrel, having reached $111. For more than a month, Brent has clung to the $105 to $110 price range while light, sweet crude fell to around $80 a barrel last month. With light, sweet crude having settled short of $100 a barrel, Cramer thinks Brent had it right all along – oil could continue to go higher.
With oil prices continuing to rise and given the increased tension in Iran, the “Mad Money” host recommends owning an oil stock. Investors can currently get them at discount, too, because most oil stocks have been hammered lately.
Schlumberger : Cramer likes this oil company because it has exposure to both on- and offshore drilling. Its stock is currently down 15 percent for the year.
Ensco : This oil company focuses on oil drilling. Its stock sports a 3 percent dividend yield and is currently trading 7 percent below its high.
National Oilwell Varco : Aggressive investors should consider this rig builder’s stock, Cramer said, because it has the most earnings momentum of any oil service stock. It’s very wild, though, and can go up or down depending on the direction of oil futures.
EOG Resources : Risky investors should consider this stock, Cramer said, because it has the best prospects of any domestic oil and gas company. It has properties in oil-rich Eagle Ford shale in Texas, as well as the Bakken shale in Western North Dakota.
Chevron : For those interested in the oils themselves, Cramer thinks this stock is worth a look. It provides some yield protection, as it dons a 3.5 percent yield.
ConocoPhillips : This is another oil stock with yield protection, Cramer said. It boasts a 4 percent dividend yield. Plus, he thinks the Houston, Texas-based company’s plans to break up will unlock considerable value.