Chevron is one of the world's leading integrated energy companies and conducts business worldwide. The company explores for, produces and transports crude oil and natural gas; refines, markets and distributes transportation fuels and lubricants; manufactures and sells petrochemical products; generates power and produces geothermal energy and develops the energy resources of the future.
Chevron has a leading market position and a geographical diversity : it enables the group to position itself in markets with high demand, limiting its exposure to risks associated with local weather conditions and local regulations and policies. Furthermore, its integrated business operations give the company a competitive advantage with better control over time, cost and quality and long-term service support to customers.
However, the industry is highly competitive and faces stringent tax policies. As every oil and gas company, there are always water contamination concerns and legal issues can happen. The biggest threats are oil and gas prices, but the problem is the same for each company of the industry.
Fundamentally, Chevron is cheap compare to its peers. It trades at 7.41 its estimated earnings for 2012 and 2013. Moreover, the company has a lot of cash and few debts. Sales are constantly increasing. Management pays a significant dividend and often buys back its share. Finally, estimated EPS is constantly revised upwards.
In a febrile market, the security is subjected to significant downward pressures by moving averages. 50-days moving average might stop a possible increase. Chevron is likely to test its USD 96.4 support soon. This is confirmed in weekly data. 50-weeks moving average is moving as a resistance. Furthermore, a bullish gap has not been filled so it is a downside risk for the coming days.
Due to graphical analysis, investors might buy the security around the USD 96.4 support area. The target price will be the USD 103.4 resistance. To avoid important losses, a stop loss will be fixed at USD 93.9.