Trade of the Day: Bottom Fishers Should Cast a Line for CVX Stock

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Chevron Corporation (CVX) — This blue-chip integrated oil company is suffering from the massive decline in oil prices. The situation has been exacerbated by the refusal of OPEC, and specifically Saudi Arabia, to cut production in the face of a global supply glut.

This has placed pressure on Chevron’s near-term earnings picture. S&P Capital IQ estimates 2014 operating earnings will decline 5% to $10.53 per share and fall another 7% to $9.80 in 2015.

Yet, with crude prices cut in half in the past year and demand beginning to increase, it may be time to consider purchasing one of the largest and best-managed companies in the sector — and CVX stock fits that bill.

Capital IQ has a 12-month price target of $135 on shares. Combined with a dividend yield of 4%, CVX stock could offer a total return of 28%. Profits may be even higher if oil prices improve.

Technically, CVX stock is still in a downtrend, so it is only appropriate for investors and speculators who are bottom fishing in the oil patch.

Shares made an all-time high in late July, just above$135. A test of the mid-December low near $100 appears to have succeeded, as they held near $102 last week. But CVX stock must penetrate the resistance at its 50-day moving average at $111, which coincides with its bearish resistance line, before a change in trend occurs.

Lately it has exhibited renewed strength with significant accumulation at the recent lows coupled with a new MACD buy signal on Wednesday.

Traders should wait for CVX stock to confirm a bottom by closing above $111 before buying for a trading target of $120. Investors seeking a blue chip with a high yield and the potential for long-term growth should take a partial position in CVX stock now and add to it on a pullback.

CVX Stock Chart
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Article printed from InvestorPlace Media, https://investorplace.com/2015/01/chevron-corporation-cvx-stock-trade-day/.

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