Active Trader Update
Cramer: Oil-Service Stocks the New Safe Haven
Jim Cramer
02/27/07 - 01:44 PM EST
This column was originally published on RealMoney on Feb. 27 at 10:46 a.m. EST. It's being republished as a bonus for TheStreet.com readers. For more information about subscribing to RealMoney, please click here.
Looking for a safe haven? Who has pricing power that won't be eroded by this China news? Who has long-term visibility? Cereal companies? Drug companies? Aerospace? Farming? Hardware? Nah, oil service! I'm not kidding, these companies have the longest contracts, the most visibility and a fantastic long-term outlook. I believe it's important to recognize that there is a ton of oil out there but only a couple of companies have rigs that can reach it, most notably Transocean(RIG Quote) and GlobalSantaFe(GSF Quote). We need service companies, and Halliburton(HAL Quote) just announced one of the biggest buybacks -- go read the fine print of the KBR(KBR Quote) exchange. We need seismic and tech and more rigs; that's National Oilwell Varco(NOV Quote). These stocks have what people want: a long-term view with built-in estimate increases as long-term contracts roll over and as we get better rates -- because with oil above $50, drilling as deep as possible works.