Chevron (NYSE: CVX) is a buy based on the proprietary screening model used by Dow Theory Forecasts; the stock scores a 96 (out of 100), based on top ratings for quality and performance.
Editor Richard Moroney notes, "measured by proved reserves, Chevron is the fourth-largest oil company in the world. Refining and marketing assets include 20 refineries and about 20,500 retail sites in nearly 90 countries."
He explains, "High oil and gas prices and strong refining margins continue to drive Chevron's results. The company is working to improve its portfolio of production assets through acquisitions and international exploration, which should boost reserve replacement and production capacity."
With production slowing at its mature North American and North Sea assets, he points out that Chevron has been working to expand its portfolio in promising growth areas. (For example, in 2005, he observes, Chevron purchased Unocal for nearly $17.3 billion.)
Moroney adds, "Technological advances have enabled Chevron to dig deeper wells in the Gulf of Mexico, and continued success could squeeze more oil and natural gas out of regions now considered past their prime."
The company, he adds, successfully tested a well under a record 7,000 feet of water and more than 20,000 feet of sea floor in 2006, and plans to drill more deepwater wells.
The advisor forecasts, "Chevron seems poised for long-term production growth. It plans to spend a record $19.6 billion this year on capital projects, up from $16.6 billion in 2006 and $11.1 billion in 2005."
Further, he states, "In July, Chevron said it would accelerate the pace of its share-buyback program to $1.9 billion, and in April, Chevron announced a 12% increase in the quarterly dividend, marking the 20th consecutive year of annual dividend growth." Moroney concludes, "At 11 times estimated year-ahead earnings of $8.43 per share, Chevron is a Long-Term Buy."
Each day, Steven Halpern's TheStockAdvisors.com features the latest stock picks and investment ideas from the nation's leading financial newsletter advisors.
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