We recently compiled a list of the Jim Cramer on Tesla and Other Stocks. In this article, we are going to take a look at where Noble Corporation plc (NYSE:NE) stands against the other stocks Jim Cramer is talking about.
Jim Cramer, host of Mad Money, emphasized the ongoing significance of fossil fuels in supporting technological advancements, even as investments in renewable energy continue to increase. He stated:
“This is not just a grudge match between the old and the new, a battle of electric vehicles versus internal combustion. The truth is, fossil fuels are essential for a lot more than vehicles, like it or not.”
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Cramer highlighted the growing energy demands of major tech companies, noting that the data centers they are constructing consume vast amounts of electricity. While these tech giants are making substantial investments in nuclear energy, he pointed out that this power source is unlikely to significantly impact data centers for at least another decade due to the complexities of building nuclear facilities and community resistance to having them nearby.
“If we need more energy, we’re going to get it from what comes out of the ground … fossil fuels that will power the data center, specifically natural gas… You may be reluctant to invest in it, you might think who cares, but you need to know how vital all of this fossil fuel technology is to the growth of the Magnificent Seven.”
Cramer also reflected on the shift in the U.S. energy landscape, recalling how the nation was once heavily reliant on OPEC for oil imports just two decades ago. Today, he pointed out, the U.S. produces over 13 million barrels per day, making it the largest oil producer globally and a net exporter. He mentioned the Permian Basin’s unexpected resilience, continually producing despite earlier predictions of depletion.
Cramer noted that the decline of OPEC has transformed the geopolitical landscape. He referenced the 1973 oil crisis, triggered by OPEC’s retaliation against U.S. support for Israel, which led to stagflation and economic turmoil. In contrast, he pointed out that despite Israel’s current conflict, the U.S. economy is not experiencing stagflation or recession, resulting instead in a bull market. He attributed this stability to the industry, saying:
“… This industry that spent billions upon billions of dollars to try to be as low carbon as possible is the reason why oil prices have actually come down during this period. They’ve gotten so much production that OPEC is now powerless.”
Turning his attention to the broader oil industry, Cramer explored the role of oil service companies that facilitate production, including offshore drillers. He recalled becoming optimistic about oil service stocks earlier in the year, anticipating higher energy prices but admitted that this expectation did not materialize due to economic concerns dampening oil and gas markets. Despite current investor reluctance toward oil service stocks, Cramer suggested that sentiment could shift over time, especially because of the Federal Reserve’s recent rate cutting.
“Now that the FED is our friend and more rate cuts are on the table, that’s good news for the industry. I am not worried about the election either. If Trump wins, maybe we’re back to that “drill baby drill” thing. If Harris wins, we get exactly what we’ve had the last four years. Not ideal for the industry but it’s still led to record oil and gas production here in the United States.”
Our Methodology
For this article, we compiled a list of 14 stocks that were discussed by Jim Cramer during his episodes of Mad Money on October 23 and 24. 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 Noble Holding Corporation plc drilling facility in Sugar Land,Texas.
Noble Corporation plc (NYSE:NE)
Number of Hedge Fund Holders: 38
During Mad Money’s episode, Cramer mentioned Noble Corporation plc (NYSE:NE) and said:
“We hardly ever talk about the smaller offshore operators like… Noble because they never fully recovered from the fracking revolution.”
Noble Corporation (NYSE:NE) is a prominent offshore drilling contractor serving the global oil and gas industry. The company offers contract drilling services through its fleet of mobile offshore drilling units, which includes various types of drilling rigs, such as floaters and jack-ups. The company has been focused on solidifying its position in the market, becoming the largest offshore driller by market value following its acquisitions of Diamond Offshore Drilling Inc. and Maersk Drilling, according to Bloomberg.
In September, Noble Corporation (NYSE:NE) completed the acquisition of Diamond Offshore Drilling, further strengthening its standing in the industry. The transaction resulted in the creation of the largest fleet of seventh-generation dual-BOP drillships, significantly advancing the company’s capabilities.
The acquisition also contributed approximately $2 billion to the company’s backlog. An updated fleet status report was published, which noted the integration of the Diamond rigs, along with the addition of 4.8 rig years of backlog recently secured under a Commercial Enabling Agreement with ExxonMobil. The agreement pertains to four drillships currently operating offshore Guyana, bringing the company’s total backlog to an impressive $6.7 billion.
On October 23, Barclays analyst Eddie Kim lowered the price target on the stock to $48 from $54 and maintained an Overweight rating. The firm expects that 2025 will pose difficulties for offshore drillers due to a “demand air pocket” in relation to the number of rigs coming off contract. As a result, it has adjusted the day rate and contracting expectations, along with price targets for the group.
Overall NE ranks 12th on our list of stocks Jim Cramer is talking about. While we acknowledge the potential of NE 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 NE but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.