Investors who want to stock up on global uncertainty in light of Russia-Ukraine war should look to Devon Energy, CNBC’s Jim Cramer said Friday.
The “Mad Money” host’s recommendation came hours after he interviewed Devon’s chief executive, Rick Muncrief, during the CNBC Investing Club’s monthly meeting for subscribers. Cramer’s Charitable Trust owns shares of Devon, which was the best-performing stock in the S&P 500 last year. It continued moving higher in 2022 as oil and natural gas prices have climbed.
“I take calls during the monthly meeting. One caller asked me what would be a good hedge against all of the craziness out there. I said it’s real simple: owning an oil and gas stock,” Cramer said, before modifying that answer.
“I should have even made it easier. Own Devon Energy – that’s your insurance policy against continued geopolitical chaos,” he said.
Devon Energy has adopted a disciplined approach to drilling for oil, even as per-barrel prices have surged in recent months. The company instead has focused its efforts on expanding its free cash flow and returning more capital to shareholders, instituting a variable dividend on top of a fixed quarterly payout.
Cramer had been wondering whether Devon would increase its production, in an attempt to capitalize on oil prices that are significantly north of his company’s breakeven level. Muncrief told Cramer on Friday that Devon would not be doing that, adding: “Our plan is our plan.”
Cramer suggested Muncrief’s answer helped strengthen his confidence in the stock, noting the company also is “using this moment of strength to pay down debt.”
“At the moment oil represents about 4% of the S&P 500. It used to be much higher. I’d say that’s very wrong,” Cramer said. “It should be much higher now, with companies like Devon that are being extremely disciplined and returning cash to shareholders aggressively.”
Disclosure: Cramer’s Charitable Trust owns shares of Devon Energy.
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