Cramer's Mad Money - Senator Hutchinson on Energy (6/24/08)

Stocks discussed in the in-depth session of Jim Cramer’s Mad Money TV program,Tuesday June 24.

Oceaneering International (OII)

While fears of spillage from offshore drilling were justified in the past, Cramer remarked companies like Oceaneering International are making drilling cleaner. OII controls 34% of the market in ROVs or Robotic operated vehicles which remotely check pipelines, make repairs, and assist in drilling and cleaning. Half of all rigs own ROVs and demand for OII’s ROVs keep growing; the company was awarded 21 out of 22 new contracts. Three-quarters of Oceaneering International’s revenue comes from ROVs, and the company also has an ROV umbilical business which supplies power and fluid cables that connect ROVs and their ships. This business is expected to grow from 21% to 42%. Although the stock has risen $128 since May 2006, it is still cheap, trading at just 18 times next year’s estimates with a 19% earnings growth. Tuesday’s pullback provides a great buying opportunity, according to Cramer.

Senator Kay Bailey Hutchinson (R, Texas) on Energy

Cramer said the government’s ethanol policy is “the single biggest blunder I can recall.” Senator Hutchinson remarked that problems such as wheat shortages caused by the overproduction of corn and skyrocketing food prices were not even taken into consideration when the plan was introduced. Hutchinson would freeze the production of biofuels at their current levels and would take a short-term approach of lowering gasoline prices by producing more oil and a long-term solution of developing alternative energy sources, such as nuclear, wind and solar. She sharply criticized those who oppose offshore drilling; “it looks like the environmentalist community went to sleep in 1950 and haven’t woken up yet.” With cleaner ways of drilling offshore, the Senator dismissed fears as irrational. Cramer added, “I’m an environmentalist. She makes sense to me,” Cramer said. “I think you should stick with the Senator.”

GrafTech International (GTI)

While steel is continuing its run, Cramer has found a new way to play the commodity. GrafTech produces graphite electrodes used in furnaces which produce steel. These devices wear out every 8 to 10 hours, and demand for these electrodes will grow along with steel. GrafTech also produces insulation for silicon solar panel production and graphite molds for deepwater drill parts. This business is growing at a 20% pace. Although GrafTech is just short of its 52-week high, steel’s run will continue and will take GrafTech up with it.

Mad Mail: Wells Fargo (WFC), Toll Brothers (TOL), Owens-Corning (OC), Cree (CREE)

A few weeks ago, after consulting Standard & Poor’s oscillator, Cramer concluded the market was oversold and expected a rally, particularly in Wells Fargo, Toll Brothers and Owens-Corning. A viewer asked if he should hold onto these stocks, which have yet to rise. Cramer said the oscillator still indicates these stocks are oversold, so he would hold onto them for another week, but would sell if there is no activity. He added his Game Plan segment on the Friday edition of Mad Money is meant to be trading advice, not investment advice. Cramer dismissed another viewer’s recommendation of Cree, and said that stock has been a loser.

Seeking Alpha publishes a summary of Jim Cramer's stock picks every day including: Mad Money Recap, Lightning Round, Stop Trading and his Wall Street Confidential Picks.

Get Cramer's Picks by e-mail -- it's free and takes only a few seconds to sign up.

Seeking Alpha is not affiliated with Jim Cramer, CNBC or TheStreet.com