We see elevated oil prices in 2024 driven by tight supply, geopolitical risks, and increasing demand. In such a scenario, Saqib Iqbal, a financial analyst at Trading.Biz, thinks this particular oil stock can climb up to 12% in March 2024.
Chevron Corporation (NYSE: CVX) has all the potential of a good bargain right now.
The stock is undervalued by 6% and promises significant cash returns to shareholders.
CVX’s true upside potential lies in acquiring Hess (NYSE: HES).
He says, “A few good points are supporting the bullishness of Chevron Corporation (NYSE: CVX). Firstly, the stock is undervalued by 6%. Secondly, Chevron is returning a record amount of cash to shareholders. Thirdly, Chevron took over Hess (NYSE: HES). When you combine all the factors, the stock is a true bargain, eagerly waiting to go upwards.”
In the recent quarterly report, Chevron plans to return capital to shareholders consistently across market cycles through buybacks. They stated that their repurchase plan will be consistent throughout commodity cycles.
Chevron had the industry’s highest adjusted Return on Capital Employed (ROCE) of 14% in 2023. This allowed the company to distribute a record $26 billion in cash to shareholders.
Saqib thinks the Hess (NYSE: HES) takeover can be a real game changer, and if that happens, the stock can easily return to its previous levels.
Chevron Corporation (NYSE: CVX) is buying out Hess for $60 billion. The acquisition is determined by Chevron’s 30% stake in the Exxon-operated Stabroek block in the offshore waters of Guyana.
It adds great potential to the company and helps strengthen its position in the market until 2030.
However, Exxon (NYSE: XOM) and its partner CNOOC (China’s National Offshore Oil Corporation) contend that the transaction would restructure the Stabroek agreement, activating the change of control provision that could lead to further increase of their stakes in Stabroek, thus, impeding Chevron from acquisition.
Yet, Chevron still sees strategic possibilities for Hess’s (NYSE: HES) business outside the Stabroek and Bakken regions, plus Southeast Asia.
Chevron will still be committed to the merger and negotiate and arbitrate with Exxon (NYSE: XOM) and CNOOC.
NYSE: CVX Stock Analysis
Due to the ongoing strife between EXXON (NYSE: XOM) and Chevron Corporation (NYSE: CVX), the stock is trading downwards. However, Saqib thinks it’s a great opportunity to buy.
On the technical side, the stock is trading just below the 200-day MA, and the next resistance lies at 154.35. If it goes beyond this level, the next resistance levels are at 158 and then 170. That’s an increase of 12% from the current levels.