Chevron's organic reserve replacement, excluding Canadian oil sands, is sub-par, but just about every other dimension of CVX's operation rates good-to-strong. The most compelling fundamental: 20 fuel refineries, to go along with an asphalt plant, for a total refining capacity of 2.21 million barrels per day. Almost half of that fuel refining is based in the United States. The significance? As noted, gasoline consumption continues to rise - despite near-record prices - while refining capacity is not, and that bodes very well for gasoline refiners, and Chevron is well-positioned in this vital commodity business.
The risks? The usual qualifications apply here -- including a U.S. recession, breakthrough alternative fuel, or a seismic public policy action -- but don't look for any of those to appear soon.
Meanwhile, U.S. refinery capacity remains inadequate, annual U.S. gasoline consumption continues to rise, which means refinery margins should remain attractive for the foreseeable future.
([Note: Technical analysis agnostics stop reading here; all others continue.)
There is the danger for a double-top with CVX at about $95, but otherwise CVX's chart looks strong: the only breach of the 50-day moving average in the last six months occurred during the market's August 2007 sell-off. CVX currents trades around $89 with a p/e of 10.
Stock Analysis: Chevron is moderate-risk stock not suitable for low-risk investors. CVX's stock did drop below its 50-day moving average with last week's market decline, but the fundamentals suggest the drop is a buying opportunity, all other factors being equal. Hence, investors with an investment horizon of at least one year, who need an integrated oil stock / energy stock, should benefit long-term from CVX's shares.
([Note: Technical analysis agnostics stop reading here; all others continue.)
There is the danger for a double-top with CVX at about $95, but otherwise CVX's chart looks strong: the only breach of the 50-day moving average in the last six months occurred during the market's August 2007 sell-off. CVX currents trades around $89 with a p/e of 10.
Stock Analysis: Chevron is moderate-risk stock not suitable for low-risk investors. CVX's stock did drop below its 50-day moving average with last week's market decline, but the fundamentals suggest the drop is a buying opportunity, all other factors being equal. Hence, investors with an investment horizon of at least one year, who need an integrated oil stock / energy stock, should benefit long-term from CVX's shares.
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