Cramer’s Play on High Oil Prices
Oil has become remarkably resilient in this market, “Mad Money” host Jim Cramer said Monday. But since many stocks in the oil complex are trading as though the price of crude will fall back to $80 any day now, there are many bargains out there for savvy investors. One of those bargains is Fluor, Cramer said.
“[It's] a terrific way to play this new era ... of persistently high oil prices,” he said.
The engineering and construction company builds new oil and gas facilities, constructs new power plants and refurbishes aging infrastructure for oil and gas companies. Cramer considers it an oil play because 60 percent of its capital projects are oil and gas related.
“Reputation is everything,” he said, “and Fluor is known for providing exceptional services and technological know-how across every phase of every contract.”
Plus, the company has a $43 million backlog, and Cramer thinks how much business a company has in its pipeline is the best way to gauge the strength of the business. Two-thirds of that backlog is oil and gas related.
Fluor is also incredibly cheap, Cramer said. It’s trading at 14 times next year’s earnings estimates, well below its average historical multiple of 19 times earnings. He thinks the stock has a tremendous amount of room to run.
“If the stock gets dinged later this week off bad news that I'm expecting from Europe,” he said, “I would jump all over it.”
When this story was published, Cramer's charitable trust owned Fluor.
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