Cramer's 'Mad Money' Recap: Get Rigged for Oil

Click here for an archive of Cramer's "Mad Money" Recaps.

---

"Oil didn't go up today because King Fahd died," Jim Cramer told his "Mad Money" viewers Monday night. "That's silly."

Indeed, King Fahd had been ill for some time and his influence on oil wasn't terribly important anymore. But King Fahd did keep oil cheap, which cut demand for alternative energy. As a result, we have no real infrastructure for drilling, Cramer said. That's because the Saudis made oil so cheap. What's more, during the past 20 years, when the price of oil did rise, the Saudis always knocked it down.

Interestingly, though, King Fahd's oil policies now translate into higher oil prices. Cramer said he wouldn't be surprised to see oil hit $100 a barrel, as Goldman Sachs projected.

The Saudis have made us ashamed to be bullish on oil. But now it's time to build more infrastructure.

"We need to build new rigs," Cramer said. "It finally makes economic sense to finally build more rigs."

The best way to play late-cycle oil drilling? It's National Oilwell Varco(NOV Quote). The company controls 50% of the market for rig construction and capital equipment on land. It's easy to build the rigs, Cramer said; it's tougher to find rig guys to run them. But, Cramer continued, National Oilwell just makes the rigs --finding crews to run the rigs isn't National's problem.

Cramer also recommends that investors buy EnCana(ECA Quote) and Cimarex(XEC Quote), both of which are midlevel companies.

Still, Cramer's favorite is National Oilwell Varco. And he believes that investors should buy the stock.

Procter Power

What is the next big thing? Procter & Gamble(PG Quote), Cramer said. When it finally closes its deal with Gillette(G Quote) the combined company will be a powerhouse, Cramer said.

What about all of those people who continue to sell Procter? This is the wrong time to sell, Cramer said. "People are selling because they are bored." And that's wrong, he continued.