Categories Analysis, Energy

Chevron (CVX) stock turns bullish on future growth trends

Chevron Corporation (NYSE: CVX) stock has gained over 11% in the past year and over 7% in the past three months as investors turned positive about the company’s future after the recent major capital projects. This is a bullish signal where traders may prefer buying opportunities.

The stock is now trading at $121.43, which is above the 50-day and 200-day moving average of $118.62 and $119.91, respectively. This denotes an upward trending market and the shares would rise in the long term. Traders commonly view the market in relation to the 200-day moving average to analyze the general market trend and will be looking for long entries into the market.

crude oil mining
Image for representation. Courtesy: Zbynek Burival on Unsplash

As one of the largest publicly-traded oil companies, Chevron has outperformed most of the large-cap companies since the start of the crash. Thanks to the timing of the crash and Chevron’s major capital projects including Gorgon and Wheatstone projects as well as its Kazakhstan project. With a massive portfolio of assets, the company still has room for expansion with new high-quality assets addition.

Climate change turned out to be the major concern faced by Chevron as this has enabled a slow shift from oil and natural gas to better fuel sources. The natural gas and liquids demand is likely to fall from 54% to 53% by 2040 with the assumption of coal essentially remaining constant in energy demand usage.

Also, the global automotive lubricant market is expected to grow at a CAGR of 7.3% from 2019 to reach $53.43 billion by 2025, according to a report from the Research and Markets. This will be driven by the growing automotive industry, increasing vehicle production, and the rise in disposable income.

The growth in the global automotive lubricant market could be hindered by the growing popularity of electric vehicles and the volatile pricing of raw materials. The engine oil segment is expected to account for the largest share during the 2019-2025 forecast period.

Read: Devon Energy Q3 earnings snapshot

For the third quarter, Chevron missed revenue and earnings expectations as lower crude oil and natural gas prices more than offset a 3% increase in net oil-equivalent production. Earnings from the US upstream operations fell by 12% and that from the international upstream operations dropped by 22%.

As of September 30, 2019, cash, cash equivalents, and marketable securities totaled $11.8 billion, while total debt and finance lease obligations were $32.9 billion. The company’s primary financing source for working capital needs is its commercial paper program. The outstanding balance for the commercial paper program on September 30, 2019, was $9.6 billion.

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