Jim Cramer on Schlumberger Limited (SLB): ‘It Is The Best of Breed’ - InvestingChannel

Jim Cramer on Schlumberger Limited (SLB): ‘It Is The Best of Breed’

We recently compiled a list of the 8 Cheap Jim Cramer Stocks to Invest In. In this article, we are going to take a look at where Schlumberger Limited (NYSE:SLB) stands against the other cheap Jim Cramer stocks.

On a recent episode of Mad Money, Jim Cramer criticized the semiconductor sector’s performance on Tuesday, particularly in light of a significant sell-off in semiconductor stocks following disappointing earnings from ASML, which wiped out over $50 billion from its market capitalization. Cramer argued that many on Wall Street fail to grasp the enduring significance of advanced graphics chips in artificial intelligence. He emphasized that as long as innovations and new applications for computing power continue to emerge, the demand for these chips will persist.

“I don’t think the need for speed is going away. In fact, it’s only going to increase, especially when tech companies and utilities are fiercely trying to put up nuclear power plants to meet the energy demands.”

Cramer expressed frustration at how quickly some investors rushed to declare the semiconductor sector in decline.

“There were many money managers and writers falling all over each other just at the close of yesterday, at the closing bell, to write the definitive obituary for this group, even as it’s less of a group than more of like a parliament of owls that’s somehow been combined with a pride of lions, two very different beasts. As I watched and listened, I said to myself, this terrible miss by some abstruse Dutch outfit is going to make people miss out on what could be the next leg of a powerful, semiconductor rally fueled by the wall of worry and skepticism that’s being built right in my face.”

He also pointed out that various industries are only beginning to experience “AI-powered revolutions.” He explained:

“… As Jensen told me, software never dies. As long as there are new inventions and new uses for computer power, there will be more need for these chips. And you can attach them to the software, no matter what the iteration. You just have to keep buying them because you have to keep up. Right now we have revolutions just starting in healthcare, manufacturing, climate change, cybersecurity, autonomous driving, and even robots.”

He further talked about how the current bull market could gain momentum if the tech sector maintains its strength. Cramer highlighted analysis from Jessica Inskip, noting that both the S&P 500 and the Nasdaq-100 are showing promising charts. He pointed out that the market has expanded significantly compared to six months ago, but for this upward trend to persist, Inskip emphasized the need for substantial engagement from tech stocks.

Cramer discussed the weekly performance charts of the Nasdaq 100, which features some of the largest technology companies. Although the index remains in a positive trading cycle, it has not reached new highs like the S&P 500. Inskip mentioned that while the Nasdaq 100 is moving in a favorable direction, it must surpass its July peaks to stimulate a broader market rally. While Cramer acknowledged that tech might not need to lead the market, it still must closely follow the stronger sectors.

Our Methodology

For this article, we compiled a list of nearly 80 stocks that Cramer was bullish on during episodes of Mad Money aired in October. We narrowed the list to 8 stocks that had a forward price-to-earnings ratio of under 15 and were most widely held by institutional investors. We listed the stocks in ascending order of their hedge fund sentiment as of the second quarter, which was taken from Insider Monkey’s database of more than 900 hedge funds.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).

An aerial view of a well site, depicting the scale of oil and gas operations.

Schlumberger Limited (NYSE:SLB)

Forward P/E: 12.64

Number of Hedge Fund Holders: 67

Schlumberger Limited (NYSE:SLB) has been called “the best of breed” by Cramer. Here’s what he had to say:

“SLB has not gone up nearly as much as I would’ve expected. Given the fact that oil’s up, I would buy the stock right here. It is the best of breed.”

Schlumberger (NYSE:SLB) is a key player in the energy sector, focusing on carbon management and the integration of various energy systems to address the complexities of today’s energy landscape. In September, the company made significant strides in sustainable lithium production, announcing the successful demonstration of its innovative solution at a plant in Clayton Valley, Nevada. The development is focused on expediting the market introduction of responsibly sourced lithium products.

The proprietary integrated solution merges its expertise in subsurface management with advanced surface engineering technologies, including direct lithium extraction (DLE). The method allows for lithium production at a rate 500 times faster than traditional techniques while utilizing just 10% of the land typically required. Operating at approximately one-tenth the size of a conventional facility, the demonstration plant achieved a verified recovery rate of 96% lithium from brine.

The entire process, from extraction to conversion into technical-grade lithium carbonate, takes only a few hours, in stark contrast to evaporation methods, which can take up to 18 months and often yield recovery rates of 50% or less. By reaching specific technical milestones during this pilot phase, Schlumberger (NYSE:SLB) positioned itself to fully qualify under an earn-in agreement with Pure Energy Minerals Ltd., allowing for the potential acquisition of 100% ownership in the Clayton Valley Project.

On October 16, Barclays lowered the price target on the company stock to $63 from $67 and kept an Overweight rating as part of a preview for Q3 earnings in the energy services sector. Analysts at Barclays believe there is limited downside risk to estimates, suggesting that existing macroeconomic concerns and low expectations are already reflected in the group’s discounted valuations. With the outlook for 2025 resembling that of 2024, the potential for outperformance will rely on the differentiation of businesses and themes that improve earnings visibility in a low-growth environment.

Overall SLB ranks 3rd on our list of the cheap Jim Cramer stocks to invest in. While we acknowledge the potential of SLB as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than SLB but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

 

Read Next: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.

 

Disclosure: None. This article is originally published at Insider Monkey.

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