I'm reiterating my Buy rating for Chevron (NYSE: CVX), first recommended on February 13, 2009 at a price of $66.18. Oil, after doubling to $70 following its plunge to $35 from $147 last summer, is currently down, and will likely remain under pressure until there's tangible evidence of a U.S. economic recovery.
Not surprisingly, shares of CVX have been under pressure, testing $60, as they did earlier this spring.
Still, Chevron remains an attractive refining play: it owns seven refineries and one asphalt plant, and has interests in 10 international refineries, for a total operable capacity of 2.14 million barrels per day, half of which is in North America. That remains an impressive gasoline position, in the world's most lucrative gasoline market, so look for CVX to advance nicely, as gasoline demand growth resumes. The First Call FY2009/FY2010 EPS estimates for CVX are $4.62 to $7.62.
Stock Analysis: Chevron is a moderate-risk stock. Chevron is an investment, not a trade. If you've already purchased CVX's shares, hold them. If not, 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 before October 2009. Sell/Stop Loss if you were to buy shares in this company: $47.
Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
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Reader Comments (Page 1 of 1)
7-15-2009 @ 12:17AM
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