Sneak Preview: The Must-Own Sector

We have plenty of natural gas in this country, which will increasingly have to be relied on as we run down our crude resources. Natural gas has been cheap in this country because we haven't been able to store as much as we would like. Still, I believe that companies like XTO(XTO), Devon(DVN), Apache(APA), and Anadarko(APC) are all fantastic long- term buys.

For years, we starved the drilling and oil services businesses because oil was priced too low by OPEC to make alternative fuels profitable enough to develop. (OPEC's own inability to produce enough oil was responsible for much of the recent surge in oil prices, which I think will last for years.)

Now there are only a handful of companies with the expertise to drill and harvest the oil that is found. National Oilwell Varco(NOV) is the only major company left that can build drilling rigs. Schlumberger(SLB) is the only company with worldwide ability to find and drill oil. Halliburton(HAL), its smaller rival, has similar skills, but linked more to natural-gas drilling.

The remaining big prospects for oil and gas are all in deep water in remote areas, and only Transocean(RIG) has the rigs -- and the might -- to hit pay dirt in those areas. Core Lab(CLB) and FMC Technologies(FMC) have the brainpower, the intellectual capacity, to get the most out of wells thought to be spent.

All of these service companies work for publicly traded oil giants and nations that are eager to exploit their resources. If I could invest in only one sector, if you put a gun to my head and said, "Promise me you will not diversify," I might just let you pull the trigger, that's how important diversification is to me. But in the end, I would relent and say, "If I have only one sector to give to my portfolio, let it be oil and oil service."

Editor's note: This is a special sneak preview of Jim Cramer's just-released book, Jim Cramer's Stay Mad for Life: Get Rich, Stay Rich (Make Your Kids Even Richer). Look for more sneak previews every day, and get your free copy with your annual subscription to Action Alerts PLUS; click here for details. Catch Cramer in person at his last book signing event: Saturday, Jan. 12, at 1 p.m. in Westbury, Long Island's Costco.

Missed the first sneak previews? Read the book intro and the rules of getting and staying rich: Rule 1, Rule 2, Rule 3, Rule 4 and Rule 5. Know what pros do right and amateurs do wrong: Part 1, Part 2, Part 3, Part 4 and Part 5. Learn the five mini-bull markets that will stampede for years, starting with aerospace and defense and agriculture.

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