We’re buying 25 shares of Pioneer Natural Resources (PXD) at roughly $223.94 each. Following Thursday’s trade, Jim Cramer’s Charitable Trust will own 300 shares of PXD, increasing its weighting in the portfolio to 2.4% from 2.2%. We’re picking up shares of Pioneer for two reasons. The first is to put some money to work in what has been a nasty market over the past few days. It is stretches like this are why we always keep some cash on the sidelines. By having dry powder available, we can embrace these selloffs as opportunities to top off some of our positions. The second is to take advantage of the disconnect between the recent move in oil, the commodity, and Pioneer Natural Resources shares. Since late August, the price of one barrel of West Texas Intermediate crude, the U.S. oil benchmark, has made a tremendous run, climbing from about $80 to roughly $90. PXD @CL.1 YTD mountain Pioneer vs. WTI You might that a stock directly linked to the price of oil would have made a similar move. But, the opposite has happened here, with Pioneer falling from the high $230s to around $225 on Thursday. The divergence here has created an opening to buy more shares as higher oil prices should lead to bigger dividends and larger share repurchases at the company level. Plus, if WTI continues to climb to $100 per barrel (like we think it will), then Pioneer’s profits should grow with it, benefitting shareholders. U.S. oil prices briefly topped $92 on Tuesday. Here’s what Jim had to say about oil and Pioneer during September’s Monthly Meeting livestream Thursday. “Oil at $92 going to $100, our new prognosis, put together with the help of my favorite commodity technician, Carley Garner, and the best oil strategist, Rusty Braziel, make me want to own two oil and gas companies. We had three, Halliburton (HAL) [which we sold and Coterra Energy is the other], and I felt too exposed. You see over time I hate owning commodity stocks because no matter what strategy they may have, whether it be drill baby drill, or return of cash flow or giant buyback or huge variable dividend, you just can’t get it right because it is out of your hands. “Now I know that Pioneer, because it has the lowest cost structure of any of the independents will do the best with oil at $92. I am surprised it is not higher. But there is no fundamental pressure that could push oil down right now as I think that there simply isn’t enough supply in the market, not with Russia selling to meet voracious demand in China and India, and the Saudis seemingly wanting the Democrats to lose on the altar of higher gasoline prices. Meanwhile the discipline to not spend beyond the drilling budget that this industry is showing is shocking. All of that cuts in favor of owning Pioneer.” (Jim Cramer’s Charitable Trust is long PXD, CTRA. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
We’re buying more of an energy stock that hasn’t rallied with oil — yet
People walk along Wall Street outside the New York Stock Exchange, May 3, 2023.
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