Monday's slide in energy was overdone. So we're adding to one of stocks in the sector

Published Tue, May 10 20228:43 AM EDT

We're buying 200 shares of Coterra Energy (CTRA) at roughly $29.64 each. Following Tuesday's trade, the portfolio will own 1,600 shares of CTRA, increasing its weighting to 1.61% from 1.41%. We're doing some buying Tuesday morning because at minus 6.51%, the S & P Oscillator has moved firmly into oversold territory. Remember, an Oscillator value reaching minus 4% means the market is technically said to be oversold. As we have said previously, we recommend the Club take advantage of the oversold condition by gradually putting money to work in high-quality companies that make stuff and do things at a profit, offer generous dividends and buybacks, and trade at reasonable valuations. Energy stocks were hammered Monday on concerns related to the prolonged Covid lockdowns in China and the impact higher interest rates will have on global economic growth. While mindful of these risks, we think Monday's sell-off in energy represents an opportunity to add to the group because of how tight supply is and the attractive cash returns they offer. The energy stock we are adding to is Coterra Energy, the exploration and production company that gets about half of its revenues from natural gas. It's worth noting that natural gas recently pulled back, falling about 4% early Tuesday. When Coterra reported its first quarter results last week, the board announced a quarterly base plus variable dividend of $0.60 per share. On an annualized basis, this dividend yield is about 8.2% based on Monday's closing price. It's one of the highest in the S & P 500 . We also like how Coterra has the power to buy back a ton of stock. Even after repurchasing $184 million worth of stock last quarter, the company still has roughly $1.066 billion remaining under its authorization. That represents about 4% of the company's current market cap. In a volatile market like we've seen lately, we appreciate companies like Coterra that offer large cash returns. With interest rates on the rise, you simply cannot count on a stock to expand its price-to-earnings multiple like it used to. But with energy prices as high as they are, you can count on a company like Coterra for its dividends and buybacks. (Jim Cramer's Charitable Trust is long CTRA. 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.

In this photo illustration, a Coterra Energy Inc. logo is seen on a smartphone screen.

Pavlo Gonchar | SOPA Images | LightRocket | Getty Images