The market is starting to feel mighty toppy after eigt straight days of gains on the Dow and CNBC displaying a constant banner on how many points we have left before we exceed 2007 highs on the S&P. This is interesting in that core CNBC contributor Guy Adami is saying the highs are in for the year and Doug Kass is negative on the market right now. It might be a good time to rotate into safer/lower beta stocks, especially ones with solid dividend yields that have a consistent history of raising their payouts. One stock that meets those criteria in that it's cheap and has some positive developments recently is Chevron (CVX).
Here are some recent positives:
- The company outlined how it plans to grow production 25% by 2017. It is a solid, viable plan that this energy behemoth should be able to execute against.
- Cowen Securities just raised its price target on the shares to $133 from $129 a share. The analyst firm expects the oil company to maintain its sector-leading operational and financial performance.
- TheStreet also recently reiterated its buy rating on the stock.
- Hugo Chavez's recent death is non-event in short term, but in the longer term it could prove to be a positive given that Chevron, at one time, had a large presence in Venezuela.
Here are four reasons why CVX is a safe value pick at $118 a share:
- The company has the same credit rating (AA) as the federal government. It also pays a 3% dividend, higher than the 2% available in 10-year Treasuries. In addition, Chevron has doubled its dividend payout over the last seven years.
- CVX has S&P's highest rating -- "Strong Buy" -- and a $135 price target on the shares. Credit Suisse has an "outperform" rating and a $130 price target on the stock.
- It has a lower beta (.70) than the overall market. The energy index has also underperformed the overall market so far this year, and Chevron should benefit as that inevitably reverses.
- The stock trades at 9x earnings, which is cheap given its dividend and long-term production growth projections.
Disclosure: I am long CVX.