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Chevron: The Party Is Over

Apr. 05, 2021 9:55 AM ETChevron Corporation (CVX)89 Comments


  • Chevron shares have flown higher in recent months.
  • But that move appears to be due to the move in crude oil, which has stalled.
  • Chevron continues to cut capex and sell assets to pay its dividend, so the payout is safe.
  • But the stock is fully valued at best and needs a period of digestion or a pullback.
Chevron Reports $8.3 Billion Loss For Second Quarter
Photo by Justin Sullivan/Getty Images News via Getty Images

Energy stocks as a sector were beaten down for several months following the initial panic of the pandemic. That made sense as air travel all but stopped, and tens of millions of people began working from home or were simply let go

This article was written by

Josh Arnold profile picture

Josh Arnold has been covering financial markets for a decade, utilizing a combination of technical and fundamental analysis to identify potential winners early on in their growth cycles. Josh's focus is mainly on growth stocks. His goal is efficient and profitable use of capital, which overly rigid buy-and-hold strategies do not allow.

Josh is the leader of the investing group Timely Trader where he focuses on limiting risk and maximizing potential reward. Features of Timely Trader include: real-time alerts, a model portfolio, technical charts, sentiment indicators, and sector analysis to find the best trading opportunities. Learn more.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (89)

Mark Humphrey profile picture
I think Chevron is expensive considering the times we face.

It's highly indebted in an economy that will struggle, despite and partly because of rising prices.

People think oil prices soar during inflation, but that does not have to happen if demand lags because of poor economic conditions. But costs are guaranteed to jump. Eventually rising costs world wide force cutbacks in profits and production, which eventually pushes oil prices up.

In my understanding, that's not bullish for oil producers. A flourishing economy would be bullish, but that is not coming. It's opposite, but with tons of money printing.
CVX is priced like before covid.. Other oil companies are not yet. Why should someone in the right mind buy CVX at these prices.
@User 50432366 Your premise is erroneous.
@chazsf So tell us why you think CVX is a buy right now ?
@User 50432366 You have misquoted me.
craftbrewinfo profile picture
oil is funny.. too many variables..such as today's announcement OPEC will increase production. Always liked CVX as a company over XOM, but decided back in December to invest in XOM. Exited in March with a tidy profit. Was not a long term hold for me because of the risks. BUT- I think when the economy "fully opens" when planes fly and cars drive, we will see a spike ( assuming OPEC doesn't manipulate further....)
Brought CVX back on 3/22/20 remember 55/share signed up for 1k and today 103 and change plus div. Winner??
Decent article Josh. You discuss the "massive" increase in debt taken on in the Noble acquisition. Sure it is a big increase BUT what about the top notch assets and all the infrastructure Noble built out?? I'll take the tick over 7% dividend I locked in not to mention the price appreciation since then and that yet to come.
The Noble acquisition is VERY underrated. Especially the Mid East gas and pipes. Going forward the synergies in the Permian Basin will prove greater than anticipated. I see a base building period for price +/- $107. Then another basing action +/-$121. What follows that...there will be new all time highs.
Yeah. I'm gonna take Warren Buffet over Josh Arnold, thanks.
Party just getting started, will be on way up into June. Buying now while it's down a bit.
rudz profile picture
06 Apr. 2021
gap to fill lower in the 70s, if oil done running, then gap could fil...back up the truck then
Good article.. I see it going sideways til mid may then up to 115-120. Long CVX.
After this recent oil price consolidation, I believe the party is about to start, NOT end.......reopening of global economies mean more demand for oil/gas coupled with typical summer driving season/strong season for oil/gas demand, Biden shutting down pipeline transportation, Biden shutting down drilling.......all this with the perception, or more so, the reality that democrats want higher oil prices so that alternative energy is more viable.....oil prices are going UP!
adenzeno profile picture
Plastics, lubricants, fertilizers, medicines....
Any petro related investment is dead money
@me_too not with Biden in office, prices will surely continue to climb. Long term, I agree with you.
@ErictheBull26170 What makes you think Biden in office will mean higher oil prices? Looking through oil charts over the last half century I see little to no correlation in who's in office vs crude prices.
@ShadowNinja fears that he will restrict shale production which will cause support for crude prices. Implementing tighter regulations will reduce production causing prices to rise . People are starting to travel/get out more, and will only increase. This is all imo, but hey, I may be way off
daltonb profile picture
Yes, Indeed .... intercontinental travel has not even started, in earnest, yet ......
ACSS profile picture
I like this article b/c it has a lot to make me think. I wonder how CVX compares to the other majors. Are they any better off?
I had made a decision not to invest in these oil companies and focus on the renewables but then these companies started to pick up so I thought my decision was premature. I therefore got into CVX and XOM but my heart was not in it. Got out of XOM and am now considering getting out of CVX.
I don't buy stocks for the dividends.
Good article
I sold a cvx call $130 may for $50 for fun. Hoping to keep the premium.
jodihn profile picture
@Sgt_Pepper4 when did you sell that? That is crazy premium. Wait, do you mean $50 TOTAL or $50 a share?
kthor profile picture

probably 2 contracts for $50 total since I don't think the may 21 150 option has gone up more than .30 this yr, unless it was done months ago?

edit - my bad it was 130, high price last month $1.25 per contract, but it's extra income, take a risk sell the $115-120 next time even the 110 (depends on pricing when that expires worthless)
jodihn profile picture
@kthor kind of thinking person sold 1k at $1 making $50. The high price of $112 happened in the last month.
So commodity supercycle is over? Inflation will not rise? Energy is not the best hedge? I see...
I have faith in CVX in good times and bad. Long CVX Good article.
kthor profile picture

my cost is under $60 every ten years it goes back to under 50's or close enough to it, I buy more write option for extra income
Greenhorn Investor profile picture
Thank you for the article.

If the party is over for CVX, the after-party is beginning imo. Long CVX.
@Greenhorn Investor my question with the 'clean'EVs is what will happen with the price of electricity? Am I wrong- once they have you they will really have you!
kthor profile picture
@Rick Both

in Texas probably $10k bill a month
30+% in 6 months a Massive upside? Huh?
Guess you don’t review tech or even Meme stocks.

CVX may trade sideways for a month or so, but underestimating the pent up travel demand and business output in 2nd half and you will miss out on CVX headed to around 120.
Looking at multiples to 2020 earning is silly. Absent another black swan event, Chevron isn’t going to have to contend with a repeat of that year.
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