Oil: Why You Need to Own 'Em, and How

Here we are again in the weeklong pullback in oil where the stocks all get thrown out and no one wants to touch them. We will soon hear from the chartists that they were unable to take out their highs, or they are getting the right -- and cold --shoulder.

How long until I hear that now that the bubble has popped and you are looking at Exxon (XOM - commentary - Cramer's Take) as Toll at $50 and Chevron (CVX - commentary - Cramer's Take) as Lennar for the same.

Plus you have the ne'erdowells, like the ridiculously poorly run BP (BP - commentary - Cramer's Take), truly stinking up the joint.

So, what should you do?

How about buy them?

I don't care where oil goes as long as it doesn't go below $70. When it is up here you are going to see some great earnings reports -- not as great as before, but then again oil stocks are funny.

They are no longer going to get 6 and 7 multiples. They throw off too much cash and they can buy back too much stock.

In that sense stocks like Royal Dutch (RDSA - commentary - Cramer's Take) or Total (TOT - commentary - Cramer's Take) or Chevron or Exxon are true quandaries. We don't know how to value companies that don't have up earnings but have huge earnings and cash streams.

If we value, say, Occidental (OXY - commentary - Cramer's Take), as a long-term option that's wasting away, we shouldn't be willing to pay much more than it is now, maybe lower.

But is that the right way to view companies that are able to replace their reserves? Is it the right way to view a company like Conoco (COP - commentary - Cramer's Take), which is deciding to return a huge amount to its shareholders?

I believe that the way to buy these stocks is simple: when they come down 5%-7% buy them with the expectation that oil prices will firm because of demand, but when they spring back to new highs or have nice increases from where you bought them, sell them.

They are now trading vehicles, not long-term investments, because we just got five years of crude price increases in the span of a few months.

But to not own this critical group seems wrong to me. Is it "late"? Yes. But is it over? No.

Not by a long shot.

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At the time of publication, Cramer was long Conoco.

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. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for Action Alerts PLUS. Watch Cramer on "Mad Money" weeknights on CNBC. Click here to order Cramer's latest book, "Mad Money: Watch TV, Get Rich," click here to order his book, "Real Money: Sane Investing in an Insane World," click here to get his second book, "You Got Screwed!" and click here to order Cramer's autobiography, "Confessions of a Street Addict." While he cannot provide personalized investment advice or recommendations, he invites you to send comments on his column by clicking here.

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