Chevron is the
world’s fourth largest oil company based on proven reserves. The company has grown its profits at a 15%+
annual rate over the last 10 years while earning a 15-20% return on equity. The dividend growth rate has not kept pace
with profits; but the gap in the rate of increase has been closing. CVX prospects are bright based on:
(1) improving
oil prices,
(2) it has sold
most of its non core, high cost assets redeploying the proceeds in oil and gas
exploration,
(3) one of the
most promising development project pipeline in the industry has a number of
very promising exploration projects that will grow its reserves. They include deep water production in the Gulf
of Mexico as well as fields in western
Australia , Angola ,
Nigeria and the
Gulf of Thailand
(4) CVX is
re-starting its stock buy back program.
(5) increasing
focus on alternative energy sources.
Negatives:
(1) exposure to fluctuating oil and gas prices,
(2) its extensive international operations
subjects it to currency fluctuations and political risk,
(3) its large capital expenditure budget will
increase its balance sheet leverage,
Chevron is rated
A++ by Value Line, has a low 8% debt to equity ratio and its stock yields
approximately 3.5%.
Statistical Summary
Stock
Dividend Payout # Increases
Yield Growth Rate Ratio Since 2003
CVX 3.5% 10% 25% 10
Debt/ EPS Down Net Value Line
Equity ROE Since 2003 Margin Rating
CVX 8% 21% 2 11% A++
Chart
Note: CVX stock made good progress off its March
2009 low, quickly surpassing the downtrend off its May 2007 high (straight red
line) and the November 2008 trading high (green line). Long term, the stock is in an uptrend (blue
lines). Intermediate term, it is in an
uptrend (purple lines). Short term, it is
an uptrend (brown line). The wiggly red
line is the 50 day moving average. The
Dividend Growth Portfolio owns a full position in CVX. The upper boundary of its Buy
Value Range
3/13
No comments:
Post a Comment