We’re buying 100 shares of Devon Energy (DVN) at roughly $67.41 each. Following Monday’s trade, the Trust will own 400 shares of DVN, increasing its weighting in the portfolio to 0.93% from 0.7%. Energy is the worst-performing sector in the market Monday. But we’re going to be small buyers of the dip, choosing to add to our position in exploration and production company Devon Energy . The price per barrel of West Texas Intermediate crude fell early Monday to its lowest levels of the year on concerns about global economic activity in reaction to the Covid protests in China. WTI has since reversed and moved nearly 1% higher on speculation that OPEC+ may be considering a production cut at its next meeting. Oil’s decline to the low $70s per-barrel follows the chart analysis by Carley Garner that was showcased last week on “Mad Money.” Garner sees a WTI floor of support at $75. If that level fails to hold, she would expect a quick move down to the next floor at $70 — or maybe even $65 if the selling gets ugly. But once the price gets closer to $70, you need to start some buying and continue if it falls to the $60s because she thinks the sellers will have burned themselves by that point. An exhaustion of sellers would be very bullish for energy prices in the future. As Jim said during Monday’s show, “Typically, the pain stops when there’s no one left to sell, because everybody who has gonna get out has already done so. If you wait for the underlying fundamentals to turn positive, you’ll miss the best part of the move — you have to watch for that moment of capitulation, when things still look ugly, because that tells you the bottom is at hand.” We can’t say for sure if oil will make a stand right here at $75 per barrel, but we’re adding a small amount to our energy exposure. We’ll continue to look to add on the way lower because we know a big buyer is waiting in the wings: the U.S. government. After consistently releasing barrels for the greater part of this year to help the economy combat energy inflation, the Biden administration has publicly said it intends to repurchase crude oil to replenish the nation’s Strategic Petroleum Reserve when prices are at or below $67 to $72 per barrel. Upcoming buys to refill the SPR could help put in a floor not far from these levels, creating an interesting risk-reward due to the structural challenges impacting the supply of energy. Along with our Devon Energy add Monday, we’re upgrading the stock back to our 1 rating and repurchasing 100 of the 200 shares we trimmed at around $71 in early October. We believe Devon is one of the best-run independent oil and natural gas producers thanks to CEO Rick Moncrief’s strict adherence to capital discipline and the prioritization of per-share financial growth. With shares yielding a healthy 8% when annualizing the recently announced quarterly dividend of $1.35 per share, we continue to like shares, and that’s why we’re adding to our position on Monday’s roughly 1% drop in the stock. (Jim Cramer’s Charitable Trust is long DVN. 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.
Pipes carry water, steam and oil at Devon Energy Corp.’s 35,000 barrel per day Jackfish Projects plant, where Steam Assisted Gravity Drainage (SAGD) is used to extract bitumen from oil sands, near Conklin, Alberta, Canada.
Jimmy Jeong | Bloomberg | Getty Images
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