Jim Cramer sees further rise in these four oil stocks
In January 2020, CNBC’s Jim Cramer said oil inventories were in the “death knell” phase. Since then, things have changed, and so has his gaze.
A “more disciplined approach” to capital spending, according to Cramer, could mean a further rise for oil stocks despite a remarkable rally this year. The S&P Oil & Gas Exploration & Production Select Industry (SPSIOP) index is already up more than 50% since the start of the year.
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In Thursday’s episode of “Mad Money”, he chose the following four oil producers that investors “should be prepared to own.”
Cramer likes Devon Energy Corp (NYSE: DVN) for its variable dividend which shares a share of the company’s profits with investors instead of a fixed payment. The stock has already more than doubled since the start of the year, but Cramer is confident there is more to come. He said:
I like it here because, from the way they calculate the Variable Dividend, this turns out to be one of the best returns on the S&P 500.
Pioneer of natural resources
Pioneer Natural Resources Co (NYSE: PXD) has valuable assets in the Permian Basin that could be worth more in the future, but Cramer especially likes this one for its variable dividend which he implemented shortly after the Devon. He said:
Based on what they paid in the last quarter, the stock has a 5.2% return, although it is expected to be higher than based on the company’s cash flow estimates for the next five. years.
Diamondback Energy Inc (NASDAQ: FANG) has also announced plans to switch to a variable dividend once the stock is “high enough”. For now, he is rewarding shareholders with a $ 2.0 billion share buyback program, which was enough to get him a spot on Cramer’s list.
For investors who want to play safer and invest their money in the oil giants, Cramer has chosen Chevron Corp (NYSE: CVX) as his preferred integrated oil company.
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