TheStreet.com TV Recap: Oil Still a Good Trade

Cramer says it's worked for three years and is still working.
Author:
Publish date:

"The oil trade has worked now for three years, and I see no sign of it diminishing," Jim Cramer said on TheStreet.com TV's Wall St. Confidential Web video Wednesday.

There's a tremendous amount of misperception about the oil stocks, he said. Every time crude goes down a dollar or two, "the stocks sell off horribly." Right now, there is a tug of war in the market. Investors are wondering what they should do with companies that generate a lot of excess capital but don't report an increase in earnings.

There are a lot of buybacks that go on all the time, and the "most real" buybacks are in the oils, Cramer continued. What happens is these stocks get hit when crude goes down, and then the market either sees a quick spike in crude, or news comes out that a company like

Valero

(VLO) - Get Report

is saying that the worst is over, he said. "And everything shoots back up again."

What Cramer said he's recommending is a trading strategy. "When the stocks are down, you buy them, and when

the stocks are up, you sell them," he said. "I'm not going to just tell you to buy and hold here."

Cramer: Oil Stocks a Good Trade

var config = new Array(); config<BRACKET>"videoId"</BRACKET> = 1295348203; config<BRACKET>"playerTag"</BRACKET> = "TSCM Embedded Video Player"; config<BRACKET>"autoStart"</BRACKET> = false; config<BRACKET>"preloadBackColor"</BRACKET> = "#FFFFFF"; config<BRACKET>"useOverlayMenu"</BRACKET> = "false"; config<BRACKET>"width"</BRACKET> = 265; config<BRACKET>"height"</BRACKET> = 255; config<BRACKET>"playerId"</BRACKET> = 1243645856; createExperience(config, 8);

There are some situations that are "undeniably trading oriented," and oil is one of them, Cramer said. "When you see these oil stocks down, even

Exxon Mobil

(XOM) - Get Report

, after it reported a so-so quarter, it is your chance."

Cramer is not, however, referring to oil service stocks unless they're deepwater oil service companies, because that's where the drilling is taking place, he stressed.

ConocoPhillips

(COP) - Get Report

,

Chevron

(CVX) - Get Report

, Exxon and

Marathon Oil

(MRO) - Get Report

are all repeated trades.

"Along with the major oils, we are now seeing, as we go into winter, the coal stocks and the natural gas stocks starting to do much better," Cramer added. "Those two are now lumped into my analysis of buy on weakness.

"It is no sin to trade," he went on. "There is a perception in the media that any time you trade, you lose money, but that is so refuted by the vast majority of outperforming hedge funds." While it's true that people can't be hedge funds, "that doesn't mean that there are not individual trades that can work for retail," Cramer said.

Further, it is not the same as gambling. "There is no house that's set up to win here," he said. "You have trading opportunities in the market." The single-best trading opportunity Cramer said he sees out there right now is in the oils, and he believes people should take advantage of it.

Cramer said he's also including

XTO Energy

(XTO)

, which he owns for his charitable trust,

Action Alerts PLUS,

Ultra Petroleum

(UPL)

,

Peabody Energy

(BTU) - Get Report

and

Arch

(ACI) - Get Report

to his list of stocks worth trading.

"This is a strategy that no one is going to recommend other than on Wall Street Confidential because frankly ... the rap on trading is that it's a loser's game," he said. "Any time you say everything is bad or nothing works, there are going to be exceptions; oil is the exception."

At the time of publication, Cramer was long XTO Energy.

Jim 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

Action Alerts PLUS. Watch Cramer on "Mad Money" weeknights on CNBC. Click

here to order Cramer's latest book, "Mad Money: Watch TV, Get Rich," click

here to order his book, "Real Money: Sane Investing in an Insane World," click

here to get his second book, "You Got Screwed!" and click

here to order Cramer's autobiography, "Confessions of a Street Addict." While he cannot provide personalized investment advice or recommendations, he invites you to send comments on his column by

clicking here.

TheStreet.com has a revenue-sharing relationship with Traders' Library under which it receives a portion of the revenue from Traders' Library purchases by customers directed there from TheStreet.com.