Investing Club: Buy these 4 Club stocks now if you do not own them already

Published Mon, Apr 11 20222:22 PM EDTUpdated Mon, Apr 11 20222:36 PM EDT

Kevin Stankiewicz @in/kevin-stankiewicz-b5593466 @kevin_stank

Club members who do not own Devon Energy (DVN), Chevron (CVX), Halliburton (HAL) and Wells Fargo (WFC) should consider them at current price levels. "I feel very strongly that Devon, Chevron and [Halliburton] must be bought by you if you just joined the Club," Jim Cramer said during Monday's Morning Meeting. Later in the broadcast, he issued a similar statement about Wells Fargo. "I feel very strongly you should buy this if you don't own Wells," Cramer said. Why these energy stocks? Each Club holding fills a slightly different lane in the energy sector, but collectively they are bets on a longer-term structural bull market for oil and gas. As a result, we feel confident in still owning them at current levels and recommending them to Club members — even despite the price of crude oil falling in recent weeks. On Monday, in particular, both the U.S. and international oil benchmarks fell by about 3%. Shares of Devon, Chevron and Halliburton also were firmly in the red Monday. The reason we remain confident is because of why there's been weakness in oil prices lately. Two factors have likely had the most impact on the market. First, the U.S. and other nations pledged to release millions of barrels from their strategic petroleum stockpiles to offset the impact from lost Russian oil supply. Second, demand from the world's second largest economy has softened as China grapples with its worst Covid outbreak since early 2020. In our minds, these developments are delivering temporary relief, not long-term easing to the supply-demand equation. In fact, some analysts, including those at Goldman Sachs, have pointed out that large oil reserve releases create the need to refill stockpiles in the coming years. Put it all together, and that's why we like these energy names on this dip. The case for Wells Fargo Wells Fargo, which reports earnings on Thursday morning, also can be bought here. We were glad to see Citi analyst Keith Horowitz agrees with us. Horowitz on Monday upgraded WFC to buy from neutral, citing the bank's ability to navigate the current economic situation. "As we refreshed our models, one balance sheet that clearly stood out to us was WFC in terms of capital flexibility and asset sensitivity," Horowitz wrote. Interest rates are going up, and that can benefit Wells Fargo through a boost to the bank's net interest margin. That basically means Wells Fargo can make more money on the difference between what it pays customers for their deposits and what it charges on loans. Some investors appear more cautious on bank stocks due to recession fears; economic downturns are generally not good for banks. However, the Club is not anticipating a recession in the near or medium term, which factors into our view on Wells Fargo. The stock is cheap, trading at around 11.5 times forward earnings. We also like the size of Wells Fargo's stock buyback program. Earlier this year, the San Francisco-based bank also increased its dividend to $0.25 per share. These reasons are why we recommended buying Wells Fargo on Thursday . Other major banks such as JPMorgan (JPM) have seen their stocks reach record highs during the Covid pandemic, but not Wells Fargo. More than four years ago, WFC traded around $66 per share. We think it can get back near those levels. (Jim Cramer's Charitable Trust is long DVN, CVX, HAL and WFC. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

Journalists are reflected in the sunglasses of drilling site manager Greg Murphy during a media day at Chevron's site in Pungesti, Romania, April 8, 2014.

Bogdan Cristel | Reuters