Why is Chevron stock falling after strong gains?

Long-term investors should continue to watch CVX stocks for buy signals

Chevron (NYSE: CVX) picked a bad day to post strong gains. Despite a double blow to the company’s first-quarter earnings, CVX stock fell more than 3%. Concerns about inflation and rising interest rates overwhelm any good news companies can deliver.

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It probably doesn’t help that Chevron is one of the leading companies in the oil and gas sector. These companies profit (literally) when the price of crude oil rises. And when you add in calls for more domestic production in the wake of Russia’s war against Ukraine, Chevron’s numbers weren’t entirely unexpected.

To live up to expectations

I was optimistic about CVX stock when I was Kate Stalter’s guest on the MarketBeat Podcast. At the time, I wasn’t splitting the atom when I expressed an optimistic view of Chevron. At the time, I pointed to the company’s record-free cash flow, a repayment of significant debt, 34 straight years of dividend hikes, and the company saying it could continue to reward shareholders through share buybacks.

There is almost no more perfect setup than that. But that wasn’t enough for investors on a day when the broader market sold off by more than 900 points.

doing his part

In the company’s earnings report, Chevron said it had increased domestic oil and gas production by 10% from the previous year. That includes a record 692,000 barrels in the Permian Basin. In addition, the company indicated that it plans to reach a production capacity of 700,000 to 750,000 barrels of oil by the end of the year.

However, Chevron is also taking steps to increase its liquefied natural gas (LNG) production. The Biden administration is asking US companies to help increase supplies of LNG in Europe in response to Russian sanctions. Chevron, for its part, said it was a high priority and is considering expanding new LNG investments in the US Gulf and an existing LNG project in Israel.

An eye to the future

Chevron puts investing in the company second on its list of priorities after the dividend. And that investment includes areas like renewable natural gas, renewable diesel and sustainable jet fuel. These are areas where Chevron thinks it has an opportunity to add value. One way the company is trying to do this is by partnering with dairy farmers to capture methane emissions.

And while the company uses both wind and solar energy to power parts of its operations, it doesn’t plan to become a marketer of either energy source. However, the company plans to invest in hydrogen and carbon capture.

Analysts Continue to Upgrade CVX Stocks

In March, Thomas Hughes, a MarketBeat employee, expressed an optimistic view of Chevron, based on a string of analysts who boosted the company’s stock price. That trend continued in April. And many of these target prices are well above the current price of CVS stock.

Remember that analysts have access to information that retail investors don’t. And they don’t like to look silly when they call. So if analysts are so united in their bullish sentiment, that’s a data point investors shouldn’t ignore.

Is Chevron a sale?

It will be, but not now. This is a case of not fighting the tape. Chevron is a favorite of many MarketBeat contributors, including me. And with its combination of rising earnings and earnings, a sustainable dividend and significant exposure to the renewable energy sector, Chevron is a stock for investors of all levels.


This post Why is Chevron stock falling after strong gains? was original published at “https://www.entrepreneur.com/article/426481”

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