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 Schlumberger Limited (NYSE:SLB) 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 well site, depicting the scale of oil and gas operations.
Schlumberger Limited (NYSE:SLB)
Number of Hedge Fund Holders: 67
Schlumberger Limited (NYSE:SLB) was discussed by Cramer during the October 24 episode of Mad Money. Talking about the stock’s performance, he said:
“So far, it’s been a pretty bad year for SLB and Halliburton, the two largest pure-play drillers, both down over 20%… SLB sells for 11 times next year’s earnings estimate. I can’t remember when it was that cheap before… However, those valuations are only attractive if SLB and Halliburton can make the numbers. Otherwise, their stocks’ going to stay in the doghouse.”
Cramer went on to discuss the company’s latest earnings report. Here’s what he said:
“Even though I like the results, the stock still dropped 5% in response, still hasn’t recovered. SLB posted a small revenue miss, paired with a 1 cent earnings beat, off an 88 cent basis… Their cash flow numbers came in much much much higher than expected but management’s commentary about SLB’s outlook for the future… was more mixed. SLB CEO Olivier Le Peuch gave a nuanced update on the industry with some worries about short-cycle oil investment as well as a bunch of positives like significant investments, natural gas production, and some encouraging comments about deepwater drilling projects.
Well, SLB doesn’t give much in the way of formal guidance. Management’s not sounding real super confident about the fourth quarter and for 2025, they’re talking about upstream spending in international market growing by low to mid-single digits. North America’s spending looks to be flat to slightly down. Overall, I think SLB continues to do fine but after communicating a mixed outlook, going forward, I wouldn’t expect Wall Street to give them the benefit of the doubt until we started seeing more signs of an upturn in the global economy.”
Schlumberger (NYSE:SLB) is a provider of technology and services within the global energy sector, focusing on various aspects of field development, hydrocarbon extraction, and carbon management. During the third-quarter earnings call, CEO Olivier Le Peuch highlighted the pressures currently faced by commodity prices, primarily due to concerns over an oversupplied market. This situation stems from increased output by non-OPEC+ producers, uncertainties surrounding OPEC+ supply decisions, reduced demand from China, and slower economic growth in the United States and Europe.
Despite these challenging market dynamics, Schlumberger (NYSE:SLB) management maintains confidence in the long-term fundamentals of the oil and gas industry. In North America, however, management does not anticipate a rebound in activity levels in the near future. Overall, the company expects these trends to contribute to a sustained level of global upstream investment in the coming years.
Overall SLB ranks 4th on our list of stocks Jim Cramer is talking about. 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.
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Disclosure: None. This article is originally published at Insider Monkey.