In a time when energy stocks have outperformed much of the market, Chevron (NYSE:CVX) stock has handsomely rewarded loyal investors. Still, there’s room for more upside as CVX stock represents a stake in both old and new approaches to power generation.
Russia’s invasion of Ukraine has put negative pressure on some sectors of the U.S. economy. Yet, leading energy corporations like Chevron have thrived this year. Some folks might hesitate to invest in Big Oil, but the transition to green energy won’t happen overnight. There will be a need for petroleum products in the near future, at least.
Besides, Chevron isn’t stuck in the past. If you can envision a robust future for reduced-carbon projects, then Chevron deserves your attention and possibly even your investable capital.
What’s Happening with CVX Stock?
Does a share-price rally mean that a stock is necessarily expensive? The answer is no, and CVX provides a textbook example of this.
Sure, the Chevron share price recently reached a 52-week high of around $180. That’s bullish if you’re a momentum-focused trader, no doubt. However, value-conscious investors shouldn’t be deterred.
Even after the share-price ascent, Chevron’s trailing 12-month price-to-earnings ratio is just 15.77. Clearly, there’s still a great value here, though the window of opportunity won’t stay open forever.
Speaking of opportunities, income-oriented investors should appreciate Chevron’s forward annual dividend yield of 3.14%. Think of this as a bonus for folks who stand by Chevron from one quarter to the next.
Besides, you’d be investing in one of the world’s most important petroleum producers. Ambitiously, Chevron recently sanctioned a project that’s expected to generate 75,000 barrels of crude oil per day.
It’s called the Ballymore project, and it’s located in the Gulf of Mexico. Astoundingly, Chevron estimates that the potentially recoverable oil-equivalent resources for Ballymore will exceed 150 million barrels.
The Future of Energy
Chevron’s aggressive drilling campaign in the Gulf of Mexico doesn’t mean that the company isn’t pushing forward with clean-energy initiatives. Consider, for example, that Chevron is launching a carbon capture and storage project in San Joaquin Valley, California.
In this project, Chevron will install CO2 post-combustion capture equipment, to capture the CO2 and then store it thousands of feet underground. Chris Powers, vice president of Carbon Capture, Utilization, and Storage (CCUS) for Chevron New Energies, commented that his company believes “the future of energy is lower carbon.”
Chevron is putting this belief into practice, not only in the U.S. but also abroad. Reportedly, Chevron announced a memorandum of understanding with KazMunayGas to explore potential lower-carbon business opportunities in Kazakhstan.
Together, they will evaluate the potential for lower-carbon projects in areas including carbon capture, utilization, and storage; hydrogen; energy efficiency and methane management; as well as carbon financial disclosure methodology.
What You Can Do Now
Petroleum drilling will be necessary for a while, so Chevron will undoubtedly retain its role as a premier oil producer. Yet, as an investor, you don’t necessarily have to pick sides between Big Oil and clean energy. CVX stock offers the best of both worlds, with generous dividend payouts along the way.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.