Activist investor David Einhorn spoke out this week against the oil shale drillers, including EOG Resources, which Cramer owns for his Action Alerts PLUS Charitable Trust.
But Cramer warned investors not to simply bet alongside Einhorn and reminded viewers of his track record. He noted Einhorn was completely wrong when he bet against Keurig Green Mountain (GMCR) last year, and the activist investor covered his short position at a major loss.
After that, Einhorn was wrong again when he bet against Amazon.com (AMZN), which rallied strongly in response to his criticisms.
EOG has been lowering its costs because of plunging oil prices. The company lost money in its latest quarter, but Cramer said it is one of the companies best positioned with regard to the recovery in oil prices that is just beginning.
Cramer said it is not fair to lump EOG in with the lesser names in the oil patch. Furthermore, he said Einhorn's comments on the group are about 10 months too late to make investors any money.
Cramer maintained his optimistic position on Thursday morning. "[It's the] cheapest and fastest growing. Usually don't get that," he said.
Separately, TheStreet Ratings team rates EOG RESOURCES INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate EOG RESOURCES INC (EOG) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The current debt-to-equity ratio, 0.40, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.12, which illustrates the ability to avoid short-term cash problems.
- The gross profit margin for EOG RESOURCES INC is rather high; currently it is at 68.25%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, EOG's net profit margin of -7.35% significantly underperformed when compared to the industry average.
- EOG, with its decline in revenue, slightly underperformed the industry average of 35.2%. Since the same quarter one year prior, revenues fell by 43.2%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- EOG RESOURCES INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, EOG RESOURCES INC increased its bottom line by earning $5.32 versus $4.03 in the prior year. For the next year, the market is expecting a contraction of 98.8% in earnings ($0.06 versus $5.32).
- In its most recent trading session, EOG has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
- You can view the full analysis from the report here: EOG Ratings Report