How Core Labs Profits From Higher Oil Prices

As the price of oil continues to climb, Cramer on Wednesday said oil companies will pay up to get more out of their existing wells and find new places to drill. To play it, the "Mad Money" host recommends Core Laboratories.

Based in Amsterdam, Core Labs is in the business of reservoir optimization. In other words, it helps oil and gas producers locate optimum drilling locations. It then makes use of technology to ensure the well is working to its potential. Its software and engineers monitor the well and provide oil companies with real-time data to maximize efficiency.

Cramer first recommended shares of Core Labs on Feb. 2, 2010 when it was trading at $59.74. Since then, the stock has made a gain of 54 percent while the S&P 500 index is up just 12 percent over the same period. Last month, Core Labs more than tripled its dividend and it now yields 1.5 percent.

Going forward, Cramer thinks the stock has more room to run, as the company boasts high operating margins, strong cash flows and a high return on invested capital. Seventy percent of its business comes from around the world, where Cramer said oil companies are desperate to increase production. Core Labs recently reported a better-than-expected quarter with earnings of 84 cents a share, which is a 3 cent beat when non-cash items are excluded. It also reported stronger-than-anticipated revenues. The company also issued upside earnings guidance for next quarter, but said revenues are expected to be lighter than what analysts are hoping for.

To learn about the company's true prospects in the time ahead, Cramer invited Core Labs CEO David Demshur onto "Mad Money." Check out the full interview by watching the video.

Call Cramer: 1-800-743-CNBC

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