Chevron's (NYSE: CVX) shares have been beaten-down amid the U.S. and global recessions that choked-off demand and caused a collapse in both oil and gasoline prices. Analysts expect 2009 EPS to be cut in half from 2008, and the shares reflect that, having fallen to the $67-$72 range, with a miniscule p/e of about 6. Shares had traded above $100 about a year ago.

To be sure, the integrated oil and refining sectors are fraught with risk, so they're not for low-risk investors, but here's why Chevron is worth an investment: the company owns 10 refineries and two asphalt plants, and has interests in 12 international refineries. Gasoline refining margins have been squeezed as a result of declining demand in the U.S., but history says declining demand can't continue forever. The U.S. auto/vehicle fleet will become more efficient, but gasoline demand will nevertheless recover as the U.S. economy does, lifting gasoline's price, and Chevron's revenue. It would not be a stretch to see CVX's price nearing $110 by mid-2010.

Also impressive: Chevron's footprint: two U.S. brands (Chevron, Texaco), with ownership or operational stake in 9,700 stations; and an international brand (Caltex), with 15,400 stations. The First Call F2009/F2010 EPS estimates for CVX are $5.55 / $7.99.

The risks with CVX are obvious: a collapse in the price of oil below $25 would seriously hurt Chevron's results.

Stock Analysis: Chevron is a moderate-risk stock. CVX is an investment, not a trade. Consider buying a 25% position in CVX now; then buy another 25% in three months, if U.S. economic conditions don't worsen substantially. Under any circumstance, don't buy more than 50% of your CVX position in the first half of 2009. Sell/stop loss if you were to buy shares in this company: $47.

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Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.