Savings Experiment: Snow Removal
The Money Man Behind Rick Santorum: Who Is Foster S. Friess?
TheStreet.com's Jim Cramer says these stocks rise because they're doubly blessed. Integrateds fall because they aren't.So many people have been puzzled why the major integrateds have not moved with the last $30 rally in oil's spot price. The answer?
They can't take advantage of it.
They either didn't believe, and therefore didn't drill, or they have been so in the crosshairs of sovereign lunacy that they haven't been able to. They didn't have the rigs or they judged that the rigs were so expensive that, like 1980, they would look like dopes when oil came back to $40-$50, where many thought it would. (Go back and check even last year's research for price targets, most of which were from the oil companies' themselves.)
Or maybe it didn't matter anyway. So many of the contracts these companies have signed with governments around the world are either being abrogated or just outright confiscated that you have to ask yourself "Who can invest under those scenarios?" Exxon (NYSE: XOM) (Cramer's Take) in Venezuela. Shell (NYSE: RDS.A) (Cramer's Take) and now BP (NYSE: BP) (Cramer's Take) in Russia. You can't continually invest billions and then write it off because the contracts you wrote don't mean anything.
I think it is more important to focus on which stocks have gone up and that's an easy one: the natural gas stocks. These companies, which include XTO (NYSE: XTO) (Cramer's Take), Ultra (NYSE: UPL) (Cramer's Take), Anadarko (NYSE: APC) (Cramer's Take), Devon (NYSE: DVN) (Cramer's Take), Apache (NYSE: APA) (Cramer's Take), Southwest (NYSE: SWN) (Cramer's Take), El Paso (NYSE: EP) (Cramer's Take) and many of the wildcatters I have been programming on "Mad Money", are all about acquiring acres and drilling. These companies do so voraciously, they are constantly on the move and they have the excess rig capacity to do something about it.
(Remember the domestic glut, which is part of Nabors' old problems, allows for drilling to be much less expensive, not to mention shallow. The thing that's costing is that the farmers have figured out the game but it is still a small price to pay.)
These stocks fluctuate with the oil futures as they did yesterday. But if you wait a few days they stabilize and start their ramp up again because they are levered to asset growth of a rising commodity. Unlike the integrateds they are twice blessed.
There is a sense that the integrated are signaling that there is an oil top. That's so wrong. It is signaling their inability to capitalize off of it. That's why there is such a disparity with the gas wildcatters and acquirers. I remain bullish on the group despite endless carping about how they are topping. This group has been topping for two years for heaven's sake.
Sorry, I am still a believer.
Random musings: I don't trust Lehman (NYSE: LEH) (Cramer's Take) as far as I can throw 'em. These real estate portfolios -- not the Archstones, but the real junk they took back from customers -- are totally unhedgeable and in many ways worthless because of underlying fraud and because of attached HELOC that we don't even know about. The stuff's a joke and I want to emphasize that even JPMorgan (NYSE: JPM) (Cramer's Take) is shocked at how bad the stuff was from Bear. You can't hedge fraudulent securities. They had some really bad paper. More on that later. ... First Solar's (NASDAQ: FSLR) (Cramer's Take) CEO has answered a lot of questions about his selling and his program and I feel slightly better about it, but I do believe that the credibility is an issue here given all the negatives, although I also believe that the negatives are all well known, and oil is not going to plummet here, in my opinion. ...Can you believe the momentum buying in Decker's (NASDAQ: DECK) (Cramer's Take)? Sometimes the market's just pulling our legs, isn't it? The notion of valuation is out the window for some of these names ...
----------------------------------------------
RELATED LINKS:
Top Five All-Around Value Stocks: Total
Crude Oil Strikes New Intraday High
----------------------------------------------
Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. At the time of publication, Cramer was long EP, XTO and SWN.
Goldman Earnings Sink After Buffett Dividend
Johnson & Johnson's Income Falls 23%
Burberry Shares Leap on Sales Update
