We recently published a list of 10 Best Major Stocks to Invest In According to Analysts. In this article, we are going to take a look at where Chevron Corp. (NYSE:CVX) stands against the other best major stocks to invest in according to analysts.
The Post-Fed Rate Cut Opportunities
The current economic landscape presents a mix of signals as market participants assess the necessity of additional interest rate cuts. Despite overall economic strength, the Fed has hinted at potential rate reductions due to weaknesses in specific sectors. Currency dynamics are also shifting, with the US dollar weakening against the euro, adding another layer of complexity to the market environment. Amidst this backdrop, major stock indices, including the Dow Jones, continue to hover near record highs.
As analysts and market participants navigate these developments, they must consider how these factors may influence investment strategies in the coming months. Recently, discussions have emerged regarding the implications of potential rate cuts and their effects on various sectors of the economy. Some experts argue that further cuts may be necessary to support smaller businesses and consumers who are still adjusting to previous interest rate hikes.
Stephanie Link, Chief Investment Strategist and Portfolio Manager at Hightower thinks that a soft landing for the economy despite market volatility is anticipated, which is a contrasting perspective amidst market volatility and uncertainty. While there are concerns regarding the performance of small-cap stocks and their ability to keep pace with larger assets, she thinks the economy may stabilize without entering a recession. We talked about this in more detail in our article on the 10 Best Young Stocks To Buy Now, here’s an excerpt from it:
“….She believes that the Fed is skillfully guiding the economy towards a soft landing, even amidst the expected market fluctuations before the elections.
Just 3 weeks ago, the S&P 500 had dropped by 4%. Still, it rebounded by 4% the following week. It rose another 1% last week, reaching new highs, and expressed optimism about buying opportunities during any market weakness, citing better-than-expected economic growth driven by recent data, including improved retail sales and manufacturing figures, as well as a decline in weekly jobless claims to a 4-month low. This positive economic backdrop supports an estimated growth rate of 2.9%, which is expected to benefit corporate earnings.
….Link noted a broadening market trend over the past couple of months, indicating that while tech has taken the lead, other sectors such as financials, industrials, materials, and discretionary stocks are also showing strength.”
John Stoltzfus from Oppenheimer Asset Management joined CBNC’s ‘Squawk on the Street’ on September 25 to discuss the difference the Fed’s recent rate cut makes. It was highlighted that the S&P 500 is experiencing a remarkable moment, having just achieved its 41st record close of the year. Oppenheimer’s Chief Investment Strategist has set a target of 5,900 for the index, attributing this optimistic outlook to the recent rate cuts by the Fed.
Stoltzfus explained that the significance of these cuts lies in their actual implementation after a long period of rate hikes and pauses. He described the rate cut as a down payment from the Fed to both Wall Street and Main Street, signaling that further cuts could be on the horizon if necessary. Since this announcement, the market has shown mixed reactions, with defensive stocks performing well at times while technology stocks have also seen gains.
When discussing consumer discretionary stocks, Stoltzfus expressed that this sector is one of their favorites despite its underperformance earlier in the year. He noted that there has been a noticeable improvement in performance over recent months as investors recognize consumer resilience. However, he emphasized that within consumer discretionary, investors should focus on select companies rather than expecting a broad rally across the sector. Retailers leveraging e-commerce effectively are likely to perform better during the upcoming holiday season.
The conversation also touched on concerns regarding discounts in various sectors, particularly electronics. Stoltzfus acknowledged that value has become a key focus for consumers, which has led to increased competition among retailers. This competition allows consumers more options but may also pressure profit margins for some retailers. Nonetheless, he pointed out that many businesses within consumer discretionary, beyond just retail, are likely to maintain healthy margins.
Stoltzfus’ discussion highlighted the positive impact of the Fed’s rate cuts on market sentiment and consumer behavior while recognizing challenges in specific sectors. The outlook remains optimistic as investors navigate through these transitions and prepare for potential opportunities in consumer discretionary stocks and other sectors.
Methodology
We used stock screeners to look for mega cap stocks. We then selected the top 10 stocks with the highest upside potential (more than 15%), that were also the most popular among elite hedge funds, as of Q2 2024. The stocks are ranked in ascending order of their upside potential.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
An aerial view of an oil rig at sea, the sun glinting off its structure.
Chevron Corp. (NYSE:CVX)
Average Upside Potential: 18.14%
Market Cap as of September 26: $263.18 billion
Number of Hedge Fund Holders: 64
Chevron Corp. (NYSE:CVX) is a multinational energy corporation predominantly specializing in oil and gas, and it’s the second-largest direct descendant of Standard Oil, originally known as the Standard Oil Company of California. It primarily focuses on exploring, producing, and refining crude oil and natural gas, also operating in the areas of chemical manufacturing and renewable energy.
The company is investing in clean and renewable energy. In May, it successfully operated a gas turbine on a 60% hydrogen fuel blend. Additionally, it owns a 16.5-megawatt wind farm in Wyoming capable of powering 13,000+ homes annually, and a 49 MW geothermal facility in California, powering 40,000 homes. The company also distributes renewable diesel made from vegetable oils and animal fats at California terminals, offering diesel blends with 6-20% renewable content.
Chevron Corp. (NYSE:CVX) successfully ran a gas turbine on a 60% hydrogen fuel blend for several days, demonstrating the potential of hydrogen as a cleaner fuel source for industrial processes. The turbine is located near the company’s Pipeline & Power Business Unit facility in California.
By Q2, it had increased global production by 11%, with a revenue improvement of 4.67% year-over-year for the quarter, with the help of acquisitions and strategic alliances. The company integrated PDC Energy and expanded its exploration base in Namibia, Brazil, Equatorial Guinea, and Angola. In the US, net oil-equivalent production increased by 353,000 barrels per day compared to 2023.
This company is a strong investment choice due to its diversified operations, strong financial position, and consistent shareholder returns. Its integrated energy model, combined with a low debt-to-equity ratio and robust cash flow generation, provides stability and flexibility in the volatile energy sector.
Carillon Eagle Growth & Income Fund stated the following regarding Chevron Corporation (NYSE:CVX) in its fourth quarter 2023 investor letter:
“Chevron Corporation (NYSE:CVX) traded lower, along with oil prices, and issued a disappointing earnings announcement due to overseas refining losses. Separately, the company announced an agreement to buy another energy company with operations offshore of Guyana, as well as in North Dakota, the Gulf of Mexico, and the Gulf of Thailand. This is a strategic acquisition for very little takeout premium.”
Overall CVX ranks 10th on our list of best major stocks to invest in according to analysts. While we acknowledge the potential of CVX as an investment, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than CVX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.