Jim Cramer found that energy related master limited partnerships, or MLPs, were hit hard this year. This was courtesy of the plummeting price of oil and fears that the Federal Reserve will raise interest rates. However, considering the attractive yield and chatter among Wall Street analysts recently, Cramer wondered if it was time to dig through the MLP rubble to see if there was anything worth investing in.
Cramer was especially interested in this group because the Alerian MLP ETF made a new four-year low earlier this month, the price of oil appears to have stabilized and the slowing global economy could signal that the Fed will wait before it tightens.
Thus, many analysts have begun to note that high-yielding MLPs could be more attractive versus bonds. Just last week, Credit Suisse upgraded the entire group and pointed out that the average MLP sports a 7.8 percent yield.
Additionally, Credit Suisse noted that when MLPs rebound, they do so dramatically. Since the financial crisis, Cramer stated that the MLP stocks have typically provided a 40 percent return in the first eight months after they bottom. However, first the stocks need to stop going lower.
"I certainly think there is plenty of value to be found in the energy related master limited partnerships, but this is one area where you really need to pick your spots. Thanks to the recent selloff, the whole MLP space has been taken down in lockstep, the good coming down with the bad," the "Mad Money" host said. (Tweet This)
That means that while there are some MLPs out there that are dramatically undervalued, others could still be dangerous and deserve to go lower.