Jim Cramer, the portfolio manager at Action Alerts PLUS, summed up his moves in the energy sector when he described EOG as the growth story in the AAP portfolio, OXY as its income story, and ETP as a mispriced transformation story. Cramer sat down with Jack Mohr, research director at TheStreet, to discuss the recent moves Action Alerts PLUS portfolio has been making in the energy sector. To break each position down, Cramer says that ETP has the highest yield and ‘is a very aggressive company that is doing exactly what’s right in the pipes around the country.’ Cramer goes on to suggest that investors be a bit more aggressive on pipe by owning ETP. Similarly, Cramer says to own OXY for its yield, even though yields might not protect investors as much as they have in the past, given that rates are expected to rise. Mohr reiterated Cramer’s point by adding that both OXY and ETP both have very strong coverage ratios and balance sheet protection. Mohr especially likes ETP because after taking on a lot of acquisitions, ETP has transitioned from being a strictly natural gas company to a diversified energy company but Wall Street is still trading ETP without pricing in this change. Cramer explains how by not pumping and waiting for higher prices, EOG has made the smartest move in the current situation despite people’s reservations. Mohr finishes by saying that investors need to diversify themselves when investing in the energy sector and to make sure that they do not get too tied up in any single area of the sector. Cramer and Mohr advise investors that when it comes to energy, ‘you want to be in this group.’
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