An Overview
I have been working as a financial analyst for the last 13 years.
During this period, I have worked on stock analysis as well as economic analysis.
I believe I can share some quality investment ideas in this forum for long-term investors.
While cryptocurrency is the hot topic of discussion and investment, it’s important to remain invested across asset classes.
The Stock Idea
Chevron Corporation is in the energy sector and the stock has declined by 40% in the last one year.
Not surprising, with global recession, oil prices have trended lower and energy companies have been impacted.
So why I am recommending Chevron now?
First, data from the International Monetary Fund and other organizations indicates that the global economy will bounce back in 2021. As demand for oil increases, oil price will trend higher and I believe that energy stocks will also surge.
Second, Chevron has robust fundamentals. The company has $30 billion in cash and cash equivalents. Therefore, the company will emerge from the crisis with strong fundamental health. This includes low leverage.
Third, Chevron pays an annual dividend of $5.16. Even if the stock is sideways, investors get an annual dividend yield of 7.27%. Dividends are sustainable and the yield is very attractive in the current low interest rate environment.
Fourth, Chevron has quality assets in the United States and overseas with an attractive break-even. As oil trends higher, the company’s cash flows will increase and so will dividends.
I am reminded of a simple investment strategy that Warren Buffett follows – Buy low and sell high.
This is a good time to buy some stocks of Chevron Corporation.
In the next 12-24 months, the stock will trade meaningfully higher from current levels.
Please do note that this is my personal view based on my experience and current analysis. Investors need to do their homework before considering any stock. Any investment, for that matter.