JP Morgan had positive comments on Chevron (CVX) this week and reiterated their "Buy" rating on the stock. I have been a bull on Chevron since it was around $90 in late September, it is core position in my portfolio and I concur with JP Morgan in that this stock has appreciation still ahead of it.
Key highlights from JP Morgan's comments on Chevron:
- Best balance sheet in the industry
- Dividend increase in 2012
- Solid production growth in 2013
In addition, there were additional positive comments on Chevron this week
- The company said it was on track to meet its 20% production growth target by 2017.
- Reuters ran a piece saying the company could win back offshore rights in Brazil within months, which would be a positive for the stock as well.
4 reasons Chevron is still a good buy at around $110 a share:
- It is a "Strong Buy" at S&P with a $132 price target and Credit Suisse has an "Outperform" rating and a $130 price target on Chevron.
- The company has an AA credit rating and yields close to 3%. Given projected production growth, I would look for dividend payments to be hiked significantly over the next five years.
- The stock is cheap at less than 6 times operating cash flow and less than 1 times annual revenues.
- The stock is selling for less than 8.5 times forward earnings which is a discount to its historical average.
Disclosure: I am long CVX.
