This article was originally published Feb. 23Click here for an archive of Jim Cramer's Mad Money recaps.
"The supermarket aisles are the only place to hide," Jim Cramer told the viewers of his "Mad Money" TV show Monday. On yet another chaotic market day, he said consumer staples are one group that's not coming unhinged.
Cramer: Buy Oil
And so there are only the consumer staples, said Cramer, the only sector that thrives in this environment. These companies, he said, have rock solid balance sheets, have raw costs moving in their favor, love plummeting advertising and are jumping with joy over lower gas and transportation prices.
Action Alerts PLUS , as the way to play the recovery. BP, he said, is the integrated oil company that will do the best due to its low cost production and its monster 8.6% dividend yield.
Oil's Comeback"Hard assets keep their value in times of turmoil," Cramer told viewers. That's why he remains a huge supporter of gold producer Agnico-Eagle Mines ( AEM). In addition to gold, Cramer said there's another asset that's about to get its day in the sun: crude oil. Cramer said the historic plummet in oil prices from $147 a barrel to $33 a barrel is largely assumed to be from demand destruction and over supply, but this notion isn't entirely true. He said that price manipulation by hedge funds also played a large part in the rise and fall of the commodity. And with hedge funds now selling in record numbers, the price of oil has become artificially low. But Cramer said there's a lot more to like with oil. OPEC is set to reduce supply next month, which should also help stabilize the price. China, he said, will also play a huge factor, as its economy is poised to be the first to recover. Cramer said oil will be a big theme in 2009, and he likes BP ( BP), a stock which he owns for his charitable trust,
Sticking With DevonContinuing with his oil and natural gas theme, Cramer welcomed Devon Energy ( DVN) chairman and CEO Larry Nichols to the show to discuss his company's outlook and sometimes complicated financials. Nichols said Devon's slumping share price is being caused by investors only looking at the short-term weakness of natural gas, and not at the company's long- term value. He said natural gas prices will quickly rebound, and when the market return, Devon will be ready to take advantage. Nichols attributed the volatility in the company's earnings to the fact that the SEC does not allow the company to account for its reserves in accordance with current market conditions. But he said new rules, which take effect in 2010, will allow the company to eliminate the volatility and provide more accurate and stable earnings results. Nichols went on further to explain why he feels Devon's share price has been lagging that of its peers. He said the company mitigates risk different than its peers, not through hedging, but rather by maintaining a strong balance sheet and a portfolio of the best properties available. Nichols said that all of Devon's long-term projects are on-going, even if they're not generating cash this year. Cramer said he continues to stand behind Devon.
Outrage of the DayCramer once against sounded off against what he called "the ETF of mass destruction," the ProShares UltraShort Financial Fund, trading under the symbol "SKF." He said he's already shown how this fund doesn't work and why it has no reason to exists. But this time he said he's taking issue with the fund for another reason.
By his estimates, he said the fund wields a staggering $18 billion worth of selling pressure on the financials, the same stocks the Treasury Department is trying to save on a daily basis. With this constant selling pressure, the fund is only making it harder for the financials to raise capital and save themselves and shifting the burden onto the taxpayers. Cramer said the fund is costing taxpayers hundreds of billions of dollars, as the Treasury works against the fund to save our financial system. He again called for an immediate ban of the fund. "This vicious cycle has to stop," he said.