While it did not seem like it at the gasoline pump initially, the price of oil had dropped a stunning 27% since March when West Texas Intermediate recently bounced off the $94 support level. As the black gold heads back over the $100 mark, beleaguered motorists have finally seen a solid price drop at the pump, and it was not because service station and convenience store owners cut their pricing, as the president had suggested.
The reality for Americans is that we are likely into a higher-for-longer phase for crude oil pricing for a number of reasons. Demand is still very strong on a worldwide basis, the current administration has handicapped production increases domestically, and geopolitical issues always seem to stir the supply side of the equation.
The good news for investors is the hefty pullback in crude oil prices has not only brought the top stocks back to outstanding entry points, but, according to the analysts at RBC Capital Markets, “At current levels, North American senior exploration and production (E&P) companies are trading at an average debt-adjusted cash flow multiple of 3.3 times in 2022 and 2.4 times in 2023.” In other words, by almost every metric, they are cheap and demand remains strong.
We screened our 24/7 Wall St. energy universe looking for the top U.S. large-cap E&P stocks with Buy ratings across Wall Street, while the companies pay big, dependable dividends and are buying back shares. Seven top stocks hit our screen, but it is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
This integrated giant is a safer way for investors looking to get positioned in the energy sector, and shares have backed up nicely. Chevron Corp. (NYSE: CVX) engages in integrated energy and chemicals operations worldwide.
The Upstream segment is involved in the exploration, development, production and transportation of crude oil and natural gas; processing, liquefaction, transportation and regasification associated with liquefied natural gas (LNG); transportation of crude oil through pipelines; and transportation, storage and marketing of natural gas, as well as operating a gas-to-liquids plant.
The Downstream segment engages in refining crude oil into petroleum products; marketing crude oil, refined products and lubricants; manufacturing and marketing of renewable fuels; transporting crude oil and refined products by pipeline, marine vessel, motor equipment and rail car; and manufacturing and marketing of commodity petrochemicals, plastics for industrial uses, and fuel and lubricant additives. It is also involved in cash management and debt financing activities, insurance operations, real estate activities and technology businesses.
Chevron stock has a 4.07% dividend. The Credit Suisse target price of $202 is well above the $177.59 consensus target. Shares closed on Monday at $139.58.
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