Mad Money

Oil and gas stocks will continue to get beaten down without consolidation, Jim Cramer says

Key Points
  • Oil and gas stocks are likely to stay beaten down unless the industry sees consolidation, CNBC's Jim Cramer said Tuesday.
  • The "Mad Money" host said he sees similarities between the oil and gas industry and American shopping malls.
  • Cramer called on oil and gas executives to display confidence like CEO David Simon showed when he announced that Simon Property Group is buying rival Taubman Centers.
Oil & gas stocks will stay beaten down without industry consolidation, says Cramer

Oil and gas stocks are likely to stay beaten down unless the industry sees consolidation, CNBC's Jim Cramer said Tuesday.

The "Mad Money" host compared the current state of oil-and-gas affairs to that of the struggling shopping mall industry, which saw notable merger-and-acquisition activity on Monday.

Simon Property Group announced it was buying rival Taubman Centers in a $3.6 billion deal. News of the deal sent Taubman's stock up more than 50%, while Simon closed up 1.45% on Monday.

The decision from Simon, led by its CEO David Simon, to double down on the shopping mall caused Cramer to rethink his belief that the industry faced inevitable decline.

"If an oil CEO who believes in the industry wants to put his money where his mouth is, it's time to stand up and make a statement buy like David Simon has done," Cramer said Tuesday. "The longer we don't get one, the more likely it is that the energy stocks deserve to be down."

The XLE energy ETF is down 14% in the past 12 months, and the energy group was the only S&P 500 sector to decline in January.

And more specifically, the XOP oil and gas exploration and production ETF is down 20% this year and 34% over the past 12 months.

Cramer said he maintains his belief that oil and gas stocks are "uninvestable" as concerns about climate change have altered the decision-making process of some on Wall Street.

In January, Cramer argued oil was the new tobacco and said, "I'm done with fossil fuels ... they're just done."

Cramer reiterated that view last week, saying "the honest truth is I don't think I can help you make money in the oil and gas stocks anymore."

Despite holding these views on the oil and gas industry, Cramer said, "I think that they can do something to help themselves."

Cramer did not specifically mention potential mergers or acquisitions he could see transpiring. He did, however, implore executives to show the same confidence in their industry that Simon showed about shopping malls.

"Will someone stand up and play Simple Simon?" Cramer said. "The clock is ticking, the bell is tolling, tolling for the entire oil and gas group. Now is anyone listening?"

Jim Cramer says oil and gas stocks will remain beaten down without consolidation in the industry

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