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Cramer Remix: One stock that could benefit big from the US oil glut

  • A caller asked "Mad Money" host Jim Cramer for his thoughts on Valero Energy Corporation.
  • Cramer also looked into railroad operator CSX Corp's latest rally.
  • In the lightning round, the "Mad Money" host defended a Cramer-fave pizza joint.

When a caller asked Jim Cramer about Valero Energy Corporation's fate considering the decline in crude oil prices, Cramer said this was one stock that could actually benefit from the dip.

"We have too much oil in this country, which is therefore very good for Valero, frankly," the "Mad Money" host said. "And the glut is so much in the Permian [Basin] that I really do think that Valero can go up 5 or 6 more [basis] points. I think you've got a good one, but remember: With the refineries, they are always trades, because there's no real growth. There's just plan and arbitrage between the price of crude."

The call came after Cramer analyzed the rally in the stock of railroad operator CSX, which chugged up from $25 to $53 in 12 months, including a 50 percent run year-to-date.

"If you ever believed that executives didn't matter, that a CEO was just another semi-replacement cog in a larger machine, this action in CSX is proof positive that the stock market disagrees with you," Cramer said of the company's new chief, railroad veteran Hunter Harrison.

The stock's run began when activist fund Mantle Ridge, led by Wall Street legend Paul Hilal, formed a plan to coerce Harrison into taking the CEO position at CSX.

Since becoming CEO, Harrison has implemented significant changes and cost cuts at the company, driving the stock even higher.

"The market's acting like Hunter Harrison can work miracles at CSX, and honestly, he's already done a very impressive job," Cramer said. "However, this stock has already run up so much that I think if you want to buy shares in CSX, you need to wait for a better entry point if you already don't own it. I hate to chase, so be patient — sooner or later we'll get a market-wide pullback again and then you can pounce on this reinvented railroad."

Manjunath Kiran | AFP | Getty Images

With what looked like a rotation away from high-growth technology stocks seemingly ending, Cramer found himself wondering if there is more pain ahead or if the market has settled.

"It's a tougher call than I thought, even on a day where the Dow gained 93 [basis] points, S&P [500] advanced 0.45 percent — both record highs — and the Nasdaq climbed 0.73 percent, because you know what? There are so many cross-currents out there," the "Mad Money" host said Tuesday.

First, Cramer pointed out that the latest selloff did not adhere to the market's usual patterns. Typically, Friday's tech-led selling would roll over into Monday as investors fled to safer stocks.

But that did not happen. Tuesday's market action proved that money was flowing back into tech, an effect Cramer attributed to the way the selloff began.

A visitor views the video wall in the lobby of Emerson Electric's headquarters building in St. Louis.
Tom Gannam | AP
A visitor views the video wall in the lobby of Emerson Electric's headquarters building in St. Louis.

In light of a several-day pullback in the high-growth technology names, Cramer took to the charts to track one "smokestack stock" he said may be poised for a breakout: Emerson Electric.

To find out if shares of the manufacturing giant could surge higher, Cramer turned to the charts of technician Tim Collins, Cramer's colleague at RealMoney.com whose call on Qualcomm proved to be right, as the stock later saw a 6 percent trading gain.

"Collins says that this stock may be flashing more than a few sparks right here," Cramer said, turning to Emerson's daily chart.

Euro and dollar exchange currency
Philippe Desmazes | AFP | Getty Images

Then, as industrial stocks enjoy some upward action in the stock market, Cramer wonders if the global economy is really improving and taking United States' companies with it.

"I think to myself, forget President [Donald] Trump, forget U.S. infrastructure, we're going to see some pretty good growth overseas, and the buyers here are trying to get ahead of the excellent quarterly numbers that these companies will likely start reporting less than a month from now, no doubt aided by a weaker dollar," the "Mad Money" host said.

Cramer turned to 3M, a large manufacturer with international exposure, to prove his point. Since its last earnings report, the stock moved up 13 basis points and broke through the $200 level, and with only 40 percent exposure to the United States, a weaker dollar could be a boon to its bottom line, he said.

Teekay Corporation: In a Radioactive Space?

Finally, Cramer turned to the $6 stock of Teekay Corporation, a shipping play on marine energy transportation with a number of subsidiaries moving oil, natural gas, and offshore drilling supplies.

A stock that once moved in tandem with the price of crude, Teekay has lost 90 percent of its value since oil's peak in 2014, and with a recent downgrade from Morgan Stanley, Cramer looked into the company to see if it is really in trouble.

"With oil stuck in the $40s, this stock just keeps languishing in the single digits. And we know why: the cost of production here in the United States has gotten so low that our domestic companies can flood the market with supply whenever oil goes above $50 a barrel," Cramer said.

Morgan Stanley analysts argued that Teekay Corporation, the parent company, is more of a burden than an asset. They suggested a reverse merger, and Cramer said it would serve investors well to take their analysis seriously.

"Even if the situation is less dire than Morgan Stanley suggests, the fact is that this whole space has become kind of radioactive. I know you're drawn to it. I don't want that. Teekay's got plenty of troubles beyond the liquidity issue," he said. "I'm not saying the bears will absolutely be right. I am saying that there are much safer places to speculate with your money."

Lightning Round: Don't Sell DPZ

In Cramer's lightning round, he flew through his take on some caller favorite stocks, including:

Domino's: "You know what, people are always thinking [that with] Domino's, people are taking market share. Remember, it's a technology company. It sells pizzas. It's the best in the world. I think the stock can still go higher. Don't sell it."

Xylem: "I like Xylem as a pure play on water, but I've got to tell you, when Pentair splits into two, Pentair will be even better than Xylem."

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