Chevron (CVX) has been one of the leaders in the broad selection of energy stocks which have turned in standout performance in its price to date this year. The Dow Jones stock was up nearly 46% year until May 16 and was trading near new heights in a market where most stocks have tumbled.
Chevron and other oil and gas stocks have proved to be a safe haven for investors during the current volatility. First-quarter earnings boosted by soaring gasoline and oil prices helped push Chevron stock into a new high Monday but shares quickly declined. Are you considering adding this stock to your portfolio?
The stock market’s is experiencing a downward pressure so it’s not necessarily the right time to start investing in stocks, but it’s still is a great time to find the most desirable stocks to keep an eye on. Investors should search for the top companies from the most reputable industry groups which are performing better than the market. It is also possible to consider purchasing small stakes in stocks that appear promising should the market decide to rally.
CVX Stock Forecast – Chevron Technical Analysis
Chevron stock was trying to make a break above a 174.86 buy-point from an unflat base. Chevron stock broke above the buy level on May 16, but turned away at this level. The stock briefly fell into the sell zone of 7 but was able to maintain support at the 50-day level. The stock then reversed and then reclaimed the buy-point. After a couple of weeks of trading in the buy zone at 5 and then slipping to below it once more as it tries to gain support around the 21-day level.
After a breakthrough that was successful in Oct., Chevron shares soared up to record heights. The stock has remained above its 50-day moving median since the breakout and even making up the current flat base, except for a few losses in the last few weeks.
Chevron stock still maintains an excellent Relative Strength Rating of 97, which is higher than the required 80 points for growth stock contenders. In the ideal scenario, its Relative Strength Line should sit close to or in a new high when stocks break out. Chevron has that check mark also.
Another aspect to take into consideration when evaluating the stock is its current ownership of funds. Chevron stock has seen an increase in the amount of mutual funds that owned it in the most recent quarter. It was 2,850 funds who owned Chevron stock during the March-ended quarter. This was an increase from 2,774 funds the quarter prior.
Chevron Stock No. 2 in its industry
Based on IBD Stock Checkup, Chevron stock ranks as No. 1 for Composite Rating in the integrated oil and gas industry .
Due to the rising cost of oil that increased during the quarter, rising to 100 dollars a barrel, up from just $72 at the close of 2021, two of the U.S.’s most important oil firms, Chevron and Exxon Mobil (XOM) both reported substantial profits for the quarter ending in March.
The prices of natural gas and oil have been rising since the Russian invasion of Ukraine which is no doubt helping Chevron. Chevron, a California-based company, announced in a recent investor day presentation that it is increasing production in the Permian Basin. This Permian Basin is the largest U.S. production area, a giant shale oil field which covers parts of Texas in addition to New Mexico.
Chevron’s production that is unconventional, which normally involves horizontal drilling as well as fracking, reached an unprecedented 692,000 barrels of equivalent oil per day within the Permian Basin during the initial quarter. The company raised 2022 output estimates for the region to between 700,000 and 750,000 barrels per day. This is an increase of over 15% from 2021. The company is expected to raise the Permian Basin’s output to 1 million barrels per day by 2025.
The company, however, Chevron has not set out to ramp up overall production to the extent that it would like. Typically when gasoline and oil prices climb, oil firms invest heavily in increasing production. However, right now, Chevron is reaping higher profits without looking to flood the market with increased supply too quickly.
In an earlier New York Times story, the CEO Michael Wirth noted that Chevron’s unwillingness to invest in expanding production is due to the level of uncertainty that exists in the world currently. “One of the lessons of the past is that just as the bad times do not last for ever, neither do periods of strong prices.”
“It’s all a function of getting the machine back up and running. The past two years have been turbulent and unstable,” Wirth said. Wirth also said that Chevron is “on track to achieve greater returns.”
Chevron is an integrated oil and gas business This means that it takes part in multiple aspects of the value chain of the business. This includes the upstream (production) as well as the midstream (pipelines and storage) and downstream (refining and marketing) operations. Chevron divides its reporting into two main segments: upstream and downstream.
The upstream segment is comprised mainly of pursuing, developing as well as producing crude oil as well as natural gas. The company also rolls the storage, transport and marketing elements into it’s upstream. Chevron’s downstream business consists mostly of refining crude oil into petroleum products, and the manufacture for renewable fossil fuels.
On April 29, Chevron reported Q1 revenue of $54.4 billion, an increase from $32 billion during the same quarter in 2021. That’s a 70% increase, in comparison to the previous year. EPS increased to $3.25 per share, from 90 cents. That’s an increase of 261%.
Earnings from U.S. upstream operations totaled $3.24 billion in first quarter, up from 941 million in the previous year. The international upstream operation produced $3.7 billion, up from $1.41 billion last year. The upstream segment accounted for nearly all of the company’s earnings for the quarter.
Is Chevron Stock A Buy?
Chevron stock is not to be purchased right now. There is a risk that the market has reversed to an upward trend despite tension after briefly beginning a new uptrend, underscoring the volatility of the present economic climate. Importantly, is there was a chance that Chevron stock was turned down two times at the buy point and then retreated back to the base.
Just below the five percent buy zone Chevron stock may be purchaseable if it reclaims that buy level. But investors should wait for the stock to go up to stay above 174.86 buy level.
Investors who are looking to buy shares can open an initial position of a smaller size if the stock can hold above its proper entry, although it is risky. The best strategy is to use a pyramid strategy to create a position, which would protect against oversize losses. The volatile markets can be extremely unforgiving in this manner so it’s best to err on the safe side.
Copyright Reseau Actu.