NEW YORK ( TheStreet) -- "Stay the course and be ready to buy," Jim Cramer told the viewers of his "Mad Money" TV show Tuesday. He said the markets in 2011 will be full of rallies and swoons like today, but small sharp pullbacks are not reasons to sell. Rather they're opportunities to buy. Cramer said the problem with the markets are that the bears are the only ones with conviction. The bulls, he said, are still easily startled, causing sell-offs like were seen midday today. But he said the fundamentals of the worldwide recovery remain intact, which is why midday today was a great chance buy terrific companies at a bargain. Cramer said he's still a fan of Fluor ( FLR), a leading infrastructure engineering and construction company. He's also still bullish on coal giant Peabody Energy ( BTU) now that a less stringent EPA is headed to Washington. Cramer said he also still likes Schlumberger ( SLB) and Freeport-McMoRan ( FCX), two stocks that were hit today amidst the selling. Cramer said the sellers of McDonald's ( MCD) are nuts, with the stock down 8% from its highs and yielding 3.3%. Even embattled Bank of America ( BAC), a stock which Cramer owns for his charitable trust,
Breaking to the UpsideIn the "Off The Charts" segment, Cramer went head to head with colleague John Roque over the chart of the fate of the energy sector, and oil stocks in particular. According to Roque, a chart of the S&P Energy Index going back to 1999 shows that after getting killed in the 2008 market collapse, the energy stocks have been building a strong base and are finally breaking out past their April 2010 highs. The group is now above its 40-week moving average and is poised to head higher. Roque said that a chart of the Oil Service HOLDRs ( OIH) ETF sees a similar trend, with this sector also getting hammered in 2008, building a base in 2009 and now breaking out to the upside. This trend is also confirmed by a relative momentum indicator, a chart showing the relative performance of the energy stocks versus the overall S&P 500. According to Roque, the last four times the oil patch surged, the outperformance was dramatic. Turning to the fundamentals, Cramer said he agrees with Roque's analysis, saying that while the 2008 energy rally was based on speculators, this time it's based on real demand from not only the U.S., but also the world at large. "This is a long term theme," said Cramer, who noted that demand is slowly outstripping supply. "Don't over think it," said Cramer, quipping, "This is Economics 101."
Cheap Integrated Oil Trade"If you're looking for the best way to play rising oil prices, look no further," Cramer told viewers as he recommended Hess Corp ( HES), another Action Alerts PLUS stock. Cramer said that Hess is the least expensive of all the integrated oil companies, and it's also highly levered to oil and not to the slumbering price of natural gas. In fact, 97% of Hess' capital expenditures for 2011 will be for finding new oil reserves. "Hess is all about oil," said Cramer. With projects all across the globe, Cramer said Hess is also a turnaround story. He said the company had be known in the industry as "cowboys," focusing only on high-risk, high-reward projects. But lately, Hess has become more responsible in its drilling, sticking to a balanced portfolio of both high risk offshore and safer on shore projects, he added. Cramer said that Hess trades at a 10% discount to its peers, and while it has a paltry .5% dividend yield, the estimates for just 3.5% production growth in 2011 are too conservative. Cramer expects Hess to see 5% production growth and its shares to hit $90.