Not long ago, Chevron (NYSE:CVX) CEO Mike Wirth predicted that the price of oil “probably is headed for the $100 mark soon amid tightening supplies.” If you agree, then you could capitalize on the oil bull market by holding CVX stock.
Granted, there are other Big Oil business you can invest in besides Chevron. And I’ll acknowledge that Chevron is currently facing issues with workers’ unions – but more on that in a moment.
All in all, the risk-to-reward proposition looks favorable for Chevron in the coming quarters. Even if Wirth’s $100-per-barrel oil-price prediction doesn’t immediately come true, Chevron is still worth your attention and possibly your investable capital.
Chevron’s Problems in Australia
First, I’ll start with the bad news. Chevron is having off-again, on-again issues with the Offshore Alliance in Australia. The Offshore Alliance is a partnership between the Australian Workers’ Union and the Maritime Union of Australia.
Last month, it seemed that Chevron and and the Offshore Alliance had reached an agreement to resolve disagreements over workers’ pay and working conditions. It looked like workers were ready to call off their strikes at Chevron’s liquefied natural gas (LNG) facilities in Australia.
But now in October, it appears that the Australian LNG workers have voted to restart the strikes. Thus, the dispute between Chevron and the Offshore Alliance evidently isn’t finished yet.
CVX Stock Gets a High Analyst Rating
It’s important to keep tabs on Chevron’s issues with LNG workers in Australia. However, Chevron is a giant company with global operations and substantial capital reserves. So, there’s no need to lose sleep worrying about Chevron.
One Wall Street expert who doesn’t seem to be losing any sleep is Wells Fargo analyst Roger Read. Citing Chevron’s estimated free cash flow per share of $11.57 in 2023 and $16.11 in 2024, Read feels that the company “has done a better job over the last decade on capital allocation.”
Consequently, Read issued an “overweight” rating on CVX stock, which is similar to a “buy” rating. I tend to concur with Read’s assessment of Chevron, and l would add that the company should continue to generate robust revenue from its global oil-and-gas operations.
For example, Chevron is leading a group of energy companies that are in talks with the government of Cypress to develop the country’s Aphrodite offshore gas field. Additionally, Chevron is preparing to boost its oil-production activities in Venezuela. If all goes according to plan, Chevron seeks to increase its oil output in Venezuela by 65,000 barrels per day (bpd) by the end of 2024.
CVX Stock: Buy It, Hold It and Collect Dividends
You might or might not agree with Wirth’s $100-per-barrel oil-price prediction. Also, you may be concerned about Chevron’s union-related problems in Australia.
Nevertheless, it’s indisputable that Chevron is an ambitious oil-and-gas producer on a global scale. So, feel free to keep tabs on the situation in Australia. However, at the same time, don’t worry too much about Chevron’s ability to generate income.
And by the way, Chevron’s 3.72% forward annual dividend yield only sweetens the deal. Therefore, I invite you to consider buying CVX stock, holding it for years and reinvesting the dividend distributions every quarter.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
