Long-term investors should continue to watch CVX stock for buying signals
Chevron (NYSE: CVX) picked a bad day to post strong earnings. Despite a double beat in the company’s first quarter earnings, CVX stock fell over 3%. Concerns over inflation and rising interest rates are overwhelming any good news that corporations can deliver.
It probably doesn’t help that Chevron is one of the leading companies in the oil and gas sector. These companies profit (literally) when the price of crude oil rises. And when you add in the cries for increased domestic production in the wake of the Russian war on Ukraine, Chevron’s numbers weren’t altogether unexpected.
Delivering on Expectations
I was bullish on CVX stock when I was Kate Stalter’s guest on the MarketBeat Podcast. At the time, I wasn’t splitting the atom when I expressed a bullish opinion on Chevron. At the time I pointed out the company’s record free cash flow, a pay down of significant debt, 34 consecutive years of dividend increases and the company saying it may continue to reward shareholders through share buybacks.
There almost isn’t a more perfect setup than that. But that wasn’t enough for investors on a day when the broader market sold off by over 900 points.
Doing Its Part
In the company’s earnings report, Chevron reported it had increased domestic oil and gas production by 10% from the prior year. That includes a record 692,000 barrels in the Permian basin. Furthermore, the company guided that it was planning to reach a production capacity of 700,000 to 750,000 barrels of oil by the end of the year.
However, Chevron is also taking steps to increase its production of liquefied natural gas (LNG). The Biden administration is asking U.S. companies to help increase the supply of LNG in Europe in response to the Russian sanctions. For its part, Chevron said it was a high priority and was considering new LNG investments in the U.S. Gulf as well as expanding an existing LNG project in Israel.
An Eye On the Future
Chevron is putting investing in the company second on its list of priorities after the dividend. And that investment includes areas such as renewable natural gas, renewable diesel and sustainable aviation fuel. These are areas that Chevron believes it has an opportunity to add value. One way the company is attempting to do this is through a partnership with dairy farmers to capture methane emissions.
And while the company does use both wind and solar energy to power parts of its operation, it is not planning to become a marketer of either energy source. However, the company is planning on making investment in hydrogen and carbon capture.
Analysts Continue to Upgrade CVX Stock
In March, MarketBeat contributor Thomas Hughes expressed a bullish opinion on Chevron based on a raft of analysts boosting the company’s stock price. That trend continued in April. And many of these price targets are well above the current price of CVS stock.
Remember that analysts have access to information that retail investors do not. And they don’t like to look foolish when they make a call. So when analysts are this united in their bullish sentiment, it’s a data point that investors should not ignore.
Is Chevron a Buy?
It will be, but not right now. This is a case of not fighting the tape. Chevron has been a favorite of many MarketBeat contributors, me included. And with the combination of rising earnings and revenue, a sustainable dividend, and significant exposure in the renewable energy sector, Chevron is a stock for investors of every stripe.