Dig Into Deepwater Plays

Pemex, the world's third-largest producer, is at last starting to ramp up spending for drilling. Mexico has become a net importer of fuel, having to bring in $10 billion in product, which is really incredible. That has to stop, so it is committing $17 billion to drilling.

Exxon (XOM - commentary - Cramer's Take) is moving its drilling budget up, too, according to reports today. Meanwhile, oil is in short supply, according to the inventory numbers.

The drilling that needs to be done is largely deepwater. There are only three really fabulous deepwater plays: National Oilwell Varco (NOV - commentary - Cramer's Take), which builds them, GlobalSantaFe (GSF - commentary - Cramer's Take) and Transocean (RIG - commentary - Cramer's Take) to drill them.

These last two companies' stocks simply haven't gotten the respect due their visibility and their multi-year rolloff of low-priced contracts for much higher-price-tag contracts over the next three years. National Oil has a $6 billion backlog growing at 20%; its market capitalization is equal to that backlog! A competitor, Hydril (HYDL - commentary - Cramer's Take), got a bid from Tenaris (TS - commentary - Cramer's Take) that would imply a $96 minimum price target for NOV.

Yet, the bears will not let these stocks lift. They just won't.

In the end, the bears are going to be run over as the fundamentals are too good. I am laying siege to Transocean and want to be as big as possible as I can for Action Alerts Plus.com. This is where the action is for the next couple of years. That's the level of conviction I have about the deepwater plays.

At the time of publication, Cramer was long Transocean.

ALL JIM CRAMER BLOG ENTRIES | POST A COMMENT | READ COMMENTS  

---

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.

TheStreet.com has a revenue-sharing relationship with Traders' Library under which it receives a portion of the revenue from Traders' Library purchases by customers directed there from TheStreet.com.