Oil stocks strike gold

These oil companies are raising cash and drilling again, and their stocks are moving up.

By Jim Cramer Apr 21, 2010 7:20AM
Jim Cramer

By Jim Cramer, TheStreet

 

Have you noticed that the oil stocks are now higher than they were when oil hit its high? Have you noticed that the sector has far outstripped its last two runs into the $80s?

 

I think that's because the sector has growth in it. That's right, the oil companies, after sitting on their reserves or just letting them stagnate, are now spending again, drilling again, buying again, whether it be Apache (APA), Exxon Mobil (XOM), BP (BP) or Chevron (CVX), and we can see the bias causing the stocks to move.

 

I mention this in part because while Dan Dicker had a spot-on call to sell crude not that long ago, selling the stocks has been a mistake. The companies are anxious to show that they will use their cash not just to buy back stock but to buy properties, and they are raising cash, like ConocoPhillips (COP) did recently with its sale of Syncrude, to put the money to work.

 

Bing: More on Oil

 

I think the group is overextended at this point vs. the drillers. In Action Alerts PLUS, we sold our Chevron to swap into BP and buy more Marathon (MRO), simply because the move seemed to be too much too soon. Yet Chevron keeps powering higher.

 

Growth, not value is what people want. The big oils have gotten the message.

 

Random musings: For coverage on how crude broke its multi-day losing streak ahead of the supply report, see the story on our flagship site.

 

At the time of publication, Cramer was long BP and MRO.

 

Jim Cramer is co-founder and chairman of TheStreet. He contributes daily market commentary for TheStreet's sites and serves as an adviser to the company's CEO.

 

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