Oils are not equal, even though they trade together. This morning Shell (NYSE: RDS.A) (Cramer's Take) reported profits down 67%, which is 15 points more than BP (NYSE: BP) (Cramer's Take), and this matters. Conoco (NYSE: COP) (Cramer's Take) was just disastrous, down 76%, with the worse combination of bad refining and horrid natural gas numbers. Yet they are all pretty much treated equally. Meanwhile, Chevron (NYSE: CVX) (Cramer's Take) gave you a 4.6% increase in the dividend, something they hinted they could do because of the great growth of output that is hitting now. Reserves are growing.
I am hoping that these become de-ETF'd, meaning that they can trade on their own so stock-picking matters again. That's what's happening, for example, with the banks, where a different kind of reserves is distinguishing the players.
But the temptation of players to group them has led to ridiculous moves that obliterate the great work of management at BP, for example, where costs are still being taken out, or the horrid work of Valero (NYSE: VLO) (Cramer's Take), the pure refinery play that made miserable bets on heavy crude, thereby single-handedly ending the golden age of refining.
To me, the pecking order of these is clear: BP for its big and safe dividend; then Chevron because of reserve growth and projects coming on stream; then Shell, which was simply not so hot; then Conoco, just plain bad; and Valero, worst in show.
Not all oils are created equal, but you only notice when the price of crude gets hammered.
Interesting Warren Buffett-like "tide going out" lesson to see who is naked. Valero, go put some clothes on, Conoco, borrow something to wear from BP.
Jim Cramer is co-founder and chairman 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 BP and Chevron.
Will Rich Ross really have a positive impact on Disney's movie operations?
Consumers sick of recession, may spend extra on holidays
Corrections, seasonality and Santa Claus
Reader Comments (Page 1 of 1)
7-31-2009 @ 10:42AM
Ray Chisamore said...
What are your thoughts on the Staples Inc stock? Just checking a article from 2007 on a Staples employee telling everyone that Staples gives away so much stuff,of course that employee by Ken is no longer there.
Staples has closed down many non busy warehouses and put many out of a job,yet are opening new places in Florida and Texas and those employees who are out of a job can be relocated there.