Oil Stocks Stink So Sweetly

Gigantic dividend boost from Schlumberger (SLB - commentary - Cramer's Take). Yawn. Backlog equal to the company's capitalization at GlobalSanteFe (GSF - commentary - Cramer's Take). Who cares? Rates going up for Transocean (RIG - commentary - Cramer's Take). Next!

This stuff is unbelievable. I know oil's not going to rally anytime soon. The charts stink to high heaven.

But the thing I saw this morning that really scared me about this group is that Fidelity Contrafund is selling it.

When you get one of the largest mutual funds rejiggering out of oil, the market can no longer absorb that kind of selling. Unlike even a decade ago, these mutual funds take such size down that when they want out, they just destroy things.

Contra's decision to bail can simply wreck a sector, and given that Will Danoff has championed this sector mightily, it's katy-bar-the-door on the way out.

I like the stocks and have been picking at Transocean for Action Alerts PLUS, but you know what? I have a longer time horizon for that portfolio. I am not allowed to flip. If I could trade fast and furious, as I did at my hedge fund, I don't know if I would own any of these.

Just keep in mind, though, that factors such as big dividend boosts and gigantic backlogs and continually higher day rates are very unusual with the price of oil going down. It means that these stocks, unlike the last three or four go-rounds, are not going to fall apart this time.

Unless you think they already have.

Here's how we must think of these stocks, and by "these stocks" I mean National Oilwell (NOV - commentary - Cramer's Take), GlobalSanteFe and Transocean specifically:

• Their business models are not dissimilar from those of IBM (IBM - commentary - Cramer's Take), EDS (EDS - commentary - Cramer's Take) or any large technology services company.
• They are compensated for their services based on long-term contracts, the visibility of which allows them to operate their respective businesses with very, very low cost of capital.
• If these companies were valued like technology services companies, where mid- to high double-digit multiples rule, they would be double their current levels.

Understand that my view is contrarian. Right now, it will cost you money.

But what a great hedge on a commodity that is in long-term short supply, even if it is in short-term oversupply because of gamblers and warm weather that won't last forever.

At the time of publication, Cramer was long Transocean.

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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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