RealMoney Radio: Vindicating Valero

Cramer defends the refiner's stock as cheap with solid fundamentals.
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"Since the topic about oil has been raging, it doesn't surprise me one bit that you voted

Valero

(VLO) - Get Report

as the stock on demand," Jim Cramer told his

"RealMoney" radio show listeners Thursday.

Each week listeners tell him what company they want to know more about, and Cramer said that he likes Valero very much, even though the stock has dropped 8 points in two days.

"The heat on me

for taking this stand ... was vociferous," he said.

But he said that if you look at the company behind the stock, you'll find nothing wrong with the business. Valero reported a spectacular quarter, he said, and the future looks good as it embarks on an aggressive stock buyback program.

In the end, Valero is also a cheap stock. Cramer said that it sells at 8 times earnings, while the average stock on the

S&P 500

sells at 18 times earnings.

It's the largest independent refinery in the country, and the U.S. has seen no new refineries in 30 years. Cramer said that we'll likely not see another built for 30 more years because no one wants to live next door to a refinery. It's nearly impossible to expand refining capacity unless you already have it, he said, adding that Valero is in a position to expand.

Plus, Cramer believes that Valero is one of the most "pro-shareholder companies" he has ever seen.

But the price has dropped, he said, because the president and lawmakers are reacting to how steamed consumers are about high gasoline prices. Looking into how much oil companies paid in taxes, sending taxpayers money to pay for gas and giving consumers a gas tax holiday won't make more oil, Cramer said.

But these actions put refiners and oil companies in a bad light, and the stocks have taken a hit.

To see the most recent edition of The RealMoney Radio Recap in its entirety, please click here. This recap is published every day around 3 p.m. ET.

James J. Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for

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