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Chevron: Best Play For Energy Crunch

May 02, 2022 11:41 AM ETChevron Corporation (CVX)14 Comments
Cappuccino Finance profile picture
Cappuccino Finance


  • Under-investment during the pandemic era is showing its effect in crude oil price, and supply shortages will last for at least a year or two.
  • Refinery production shortages and supply chain disruptions are causing gasoline and diesel prices to rise as well.
  • Integrated oil giant Chevron is in the best place to take advantage of the widespread energy crunch.

Chevron Gas Station

MattGush/iStock Editorial via Getty Images

Investment Thesis

Chevron Corporation (NYSE:CVX) is an integrated oil & gas company that operates across the entire industry supply chain. The upstream segment explores, develops, and produces crude oil; the midstream segment transports crude oil to refineries or petrochemical

This article was written by

Cappuccino Finance profile picture
Visit me at Cappuccino Finance, I share my top picks (Value, Growth, Dividend & Growth), market outlook, and interesting ideas from super investors, based on my 12 years of experience and knowledge in stock investment and in real estate. I, Justin J. Lee, believe in fundamental analysis and disciplined market research. I have strong quant background with a Ph.D. (University of California, Santa Barbara) in model predictive control and an MBA (Jones School of Business, Rice University). My primary focus is to identify 1) small cap companies with strong fundamentals and growth potential, 2) large cap companies going through temporary set-backs, and 3) stable companies with solid dividend yields and growth potential.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of CVX either through stock ownership, options, or other derivatives. 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.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (14)

I own both CVX and XOM and regret not buying more shares. They are great energy
plays. Also, kudos to the author for a good article.
Do you have any thoughts on the SPR releases effect on the share price? It looks like a 240 million barrel put has been placed in the market. When will the oil be replaced? Does this affect your forecast timing? Will Russian supply via India or China be used to fill the eventual USA purchase demand?
Cappuccino Finance profile picture
@mlisacpa It’s unpredictable how exactly the reserve crude will impact the market price (geopolitics being geopolitics). However, I don’t think it will solve the fundamental imbalance between supply and demand. About Russia selling their crude via back channel also won’t change the market fundamentally. So my assumption on oil price staying in $90-100 would include such scenarios.
@Cappuccino Finance Got it thank you!
sanch profile picture
Any thoughts on psx and marathon petroleum in the refiner space?
Cappuccino Finance profile picture
@sanch I would put PSX and VLO at the top for pure refining place. Both of them are printing money at this point. Marathon is in between Pure refining and integrated, and lower dividend yield. So I would rate them lower.
Damon Judd profile picture
Good article and I agree with your thesis. I have avoided the energy sector for most of the past 5 years but it is looking like a good investment going forward. I bought VLO as my energy play, and also TTP which is a midstream/pipeline fund.
Cappuccino Finance profile picture
@EnigmaDude Thank you! VLO is a great choice. They will make tons of cash from gasoline and diesel. Crack spread is insane.
PT Larry profile picture
Thanks for the article. Another point is the annual increase of the population, and that every year more drivers enter the market to buy cars and fuel. Youngers likely cannot afford EVs.

Personally I like XOM better, then PXD and EOG for its natural gas production. IMO natgas will rise higher on Russian shut down.
Cappuccino Finance profile picture
@PT Larry Thank you! I agree with your assessment completely!
Did you consider XOM when choosing CVX? They are more integrated into downstream, and especially petrochemicals, than CVX.

If not, why not?
Cappuccino Finance profile picture
@texirish XOM is also a great company. And business model of XOM and CVX are more or less the same. At this point, CVX has a better balance sheet. I expect XOM to excel as well though.
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