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'RealMoney' Radio Recap: Fit for a Boomer

TheStreet.com Staff

Oil is taking out $70 a barrel and that means that gas is going to $3.25 to $3.60, Jim Cramer said on his "RealMoney" radio show Monday.

He said this is true because demand is not going anywhere, and it is getting harder and harder to find oil.

"We'll be lucky if we don't see oil go to $80," he said. For example, Cramer said that Saudi Arabia has twice as many rigs as it did five years ago but that it's not producing as much oil.

Plus, pipelines are being destroyed in oil-producing nations all over the world, pushing prices up even higher.

Pipeline destruction is going to be an ongoing problem, Cramer said, and only Oregon Steel(OS Quote) makes the steel used in oil pipelines.

Cramer said that the stock is dirt cheap, even though it is up a couple of dollars, and that it is an ongoing play on higher oil prices.

Newspaper reports over the weekend said that Wal-Mart(WMT Quote) is going to stop selling guns at about 1,000 of its stores, which Cramer pointed out is a huge move to make for the largest seller of hunting firearms.

In those locations, the company will replace its rifles with home-exercise equipment, and Cramer believes that this is more evidence that baby boomers trying to stay fit is a way to make money.

He said that Life Time Fitness(LTM Quote), the only publicly traded play on gym equipment and personal training, is the stock to buy to make money on this trend.

"It may be a great way to play the fact that Wal-Mart thinks people want to get more fit," he said.

But the retailer aside, Cramer believes that it's time to start thinking of alcohol, tobacco and firearms as something in which you can invest.

And even though he isn't a huge fan of mutual funds, he likes the Vice Fund (VICEX).

The fund is run by RealMoney.com contributor Charlie Norton, and it includes "gaming, smoking, shooting and drinking" stocks. Cramer said that it has had a 29% annualized return over the past few years.

Cramer's Callers

A caller said that he is interested in buying a driller because they are 10% below their highs, even though oil prices are going higher. The caller added that he believes the stocks will eventually rise in the current environment.

He had narrowed his choices down to two: Grey Wolf(GW Quote) and Nabors International(NBR Quote), which he owns for his charitable trust Action Alerts PLUS, even though its declines have accelerated.

Cramer said that he applauded the fact that the caller has done his homework and that both choices were good companies.

But even though Cramer likes Grey Wolf, he pointed out that the company's rigs are used to drill for natural gas.

Natural gas prices have remained low, even though crude prices are climbing, because the fuel is used for heating and air conditioning, he said.

This most recent mild winter has weighed on natural gas prices, and Cramer said that even though he believes that the stock could go from $7 to $10, he "doesn't like to bank on the weather."

Nabors, on the other hand, is one of the best oil drillers in the business, Cramer said. And even though it is at $73, he said that it's cheaper than Grey Wolf at $7. This is because Nabors' sales are growing fast.

The average stock price is about 18 times its forward earnings, but Nabors is priced at only 10 times earnings.

Cramer also said that the stock most levered to high crude prices is Occidental Petroleum(OXY Quote), which he also owns for his trust, but that the stock levered to higher pump prices is Valero(VLO Quote).

Even though the stock is up 100% over the last year, Cramer believes that it has room to move higher. "Have you seen a new refinery built?" he asked listeners.

There haven't been any built in 27 years, he said, and we need to refine crude for gasoline.

Thanks to some key acquisitions, Cramer said that the company is stronger at $65 than it was at $30, which means investors should be willing to pay more for the stock.

Finally, a listener wanted to know if $28 was a reasonable price for a commission on a limit order. Cramer said that thanks to the advent of online trading, this is too much to pay -- even though he was once able to charge $100 for a commission.

"Commissions will really cut into your trading and investing if you can't get control of them," Cramer said.

For online brokerages, he likes E*Trade(ET Quote) and Ameritrade(AMTD Quote), which he owns for his charitable trust Action Alerts PLUS.

Here's your chance to pick the stock you'd like me to feature on my radio show April 20: Avanir Pharma Avaya Cameco F5 Networks NuVasive National Oilwell Varco

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