'RealMoney' Radio Recap: Refined Tastes

Large, integrated oil companies aren't necessarily the ones making good money from high gasoline prices, Jim Cramer said on his "RealMoney" radio show Tuesday.

He said that there are better plays than Exxon Mobil(XOM Quote) and that the refiners are the pure play on this price increase at the pump.

Thanks to local governments, environmental protectionists and citizens who don't want a refinery in their backyards, no new refineries have been built in this country in 25 years, Cramer said.

But there is tremendous demand for refined gasoline.

Couple that with sky-high crude oil prices and threats to supply, and Cramer said you'll see gas prices hitting new highs.

Whoever has the most refineries and gas stations will make the money on high gas prices, he said. And his top choice was Valero Energy(VLO Quote).

He said that Alon USA Energy(ALJ Quote) would be the speculative play.

Cramer's Callers

Cramer told a caller that he couldn't "sugarcoat" the Broadcom(BRCM Quote) story, saying that the stock is getting beaten down like a pinata.

But he said that the company's fundamentals are still good because Broadcom designs, develops and supplies the brains for high-speed networking, cable set-top boxes and cable modems.

"It's in the sweet spot for video on demand," Cramer said. This is because both cable and phone companies need Broadcom products to deliver video to your home.

But the stock is up well more than 100% year on year, so Cramer said it's falling victim to profit-taking. Because last year at this time it was at $18, and now it's at $43, Cramer said he understands why people would want to lock in that kind of profit.

If you want to buy this company, he recommended buying in stages because the price is going to continue to fall. Let the market bring the stock down to a low price and then pick it up before it runs higher again, Cramer said, because there's nothing fundamentally wrong with Broadcom.

He told another caller that he can't recommend Nortel(NT Quote), despite believing that Chief Executive Mike Zafirovski is an excellent manager.

The stock is falling for two reasons, Cramer said. The first is that the company keeps finding losses, which shows that its finances are still shaky. Accounting irregularities are a good reason to stay away from a stock, he said.

Second, the company got a bid from Alcatel(ALA Quote) that ignited the group, but it is now thought that Nortel is too big a Canadian company for a buyout, Cramer said. This means the company isn't seen as a potential takeover target.