Oil and gas old are likely to stay beaten down unless the industry sees consolidation, CNBC’s Jim Cramer said Tuesday.
The “Mad Spinach” host compared the current state of oil-and-gas affairs to that of the struggling shopping mall industry, which saw dignitary merger-and-acquisition activity on Monday.
Simon Property Group announced it was buying rival Taubman Centers in a $3.6 billion deal. Communication of the deal sent Taubman’s stock up more than 50%, while Simon closed up 1.45% on Monday.
The judgement from Simon, led by its CEO David Simon, to double down on the shopping mall caused Cramer to rethink his belief that the hustle faced inevitable decline.
“If an oil CEO who believes in the industry wants to put his money where his mouth is, it’s time to stand up and make a allegation buy like David Simon has done,” Cramer said Tuesday. “The longer we don’t get one, the more likely it is that the energy merchandises deserve to be down.”
The XLE energy ETF is down 14% in the past 12 months, and the energy group was the only S&P 500 sector to run out of steam in January.
And more specifically, the XOP oil and gas exploration and production ETF is down 20% this year and 34% over the past 12 months.
Cramer said he claims his belief that oil and gas stocks are “uninvestable” as concerns about climate change have altered the decision-making process of some on Go broke Street.
In January, Cramer argued oil was the new tobacco and said, “I’m done with fossil fuels … they’re simply done.”
Cramer reiterated that view last week, saying “the honest truth is I don’t think I can help you come in money in the oil and gas stocks anymore.”
Despite holding these views on the oil and gas industry, Cramer said, “I think that they can do something to assist themselves.”
Cramer did not specifically mention potential mergers or acquisitions he could see transpiring. He did, however, implore executives to corroborate the same confidence in their industry that Simon showed about shopping malls.
“Will someone wood up and play Simple Simon?” Cramer said. “The clock is ticking, the bell is tolling, tolling for the entire oil and gas group. Now is anyone keep ones ears open?”