Production Ramps Up

In an exclusive "Executive Decision" segment, Cramer spoke with Andrew Gould, chairman of Schlumberger ( SLB), the oil service giant that just posted great earnings and a 10% dividend boost.

When asked about the overall state of the oil industry, Gould said that 2011 was a great year for exploration successes and when it comes to 2012, this will be the year that production at those new discoveries begins to ramp up. He said that in the U.S., the diversion of oil and natural gas prices has never been greater, but that does not apply to the rest of the world.

In what he described as a turn in fortune form the last few years, Gould explained that successes in finding new oil, especially offshore all over the world, has been staggering. "Those finds will come," he continued.

When asked about hydraulic fracturing here in the U.S., Gould painted an upbeat picture, saying that the theme is "do more with less." He said that new technologies will allow for less fracturing with cleaner fluids and less water, resulting in the same outputs with far less environmental concerns. We'll only be fracturing the "sweet spots," he continued.

Cramer remained bullish on Schlumberger, saying that the price of oil is poised to remain high for the foreseeable future and increased drilling activity worldwide is great news for the company.

Diversification Key

For the last of his "Tune Up" auto stocks, Cramer highlighted American Axel & Manufacturing ( AXL), a speculative $11 stock that Cramer said was cheap and moving in the right direction.

American Axel manufactures drive train parts and systems for cars and light trucks and has a $1.1 billion backlog of business. Cramer said this gives the company not only great visibility but t also has only 4% of its sales vulnerable to the ailing European markets. The stock is up 14% for the year, but Cramer noted that shares are still down 23.7% over the past 12 months and off 63% from its 2007 highs.

With a multiple of 5.6 times earnings and a 16% growth rate, Cramer said there's no doubt that American Axel is a cheap stock, but why is it a speculative stock? Lack of diversification.

Cramer explained that nearly 70% of American Axel's sales come from a single customer, General Motors ( GM). In addition, 81% of sales come from a single segment of the auto market, light trucks.

On the plus side however, the company has a plan to diversify its business both away from GM and away from light trucks. The plan calls for GM sales to account for only 60% of sales this year and head lower from there.

Cramer also noted that American Axel is also diversifying geographically as well, expanding into high-growth areas like China and Thailand. Put that all together, and Cramer said he sees a cheap stock with a lot of potential as auto sales in the U.S. continue to expand.

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