We recently published a list of the 13 Most Undervalued Blue Chip Stocks To Buy According To Analysts. In this article, we are going to take a look at where Chevron Corporation (NYSE:CVX) stands against other most undervalued blue chip stocks to buy according to analysts.
“Now is the Time to Revisit Portfolios”
The Fed went through with a 50 basis point cut and as things have started to get clear, investors must give their portfolio another look. On September 20, Matt Stucky, Northwestern Mutual Wealth Management’s chief equities portfolio manager, appeared in an interview on Yahoo Finance to discuss why and how investors must revisit their portfolios.
He suggested that now is the perfect time for investors to sit down and reassess their investments with the help of advisors. Stucky highlights that there is currently $6.3 trillion sitting in money market funds in the asset class, which may not be as attractive after the 50 basis point cut went through. He urged investors to consider a rather diversified portfolio and suggested that sitting on cash alone is risky.
He reiterated that while investors do not need to alter their long-term strategic goals, the ones with idle cash must try to allocate or deploy that money in other investment classes. According to Stucky, garnering a solid yield or return on investment does not come without risk and investors must understand that with the current Fed decision on board, it is impossible to get that kind of yield from cash alone.
What Does the Cut Signal?
On September 19, Dennis Lockhart, Former president of the Federal Reserve Bank of Atlanta, appeared in an interview on Yahoo Finance to discuss the aftermath of the rate cut. According to Lockhart, the rate cut was perfectly balanced and rather optimistic in nature.
He believes that the Fed’s decision was not reactionary to anything going on in the market or the economy. The Fed is particularly confident about the inflation rate, the labor market, and the soft landing of the economy.
Lockhart suggested that the Fed will reroute and remain flexible based on how the economy is performing from meeting to meeting. According to him, the Fed will aim to maintain flexibility and the 50 basis point cut was more like a compensation to what should have happened in July.
Our Methodology
To come up with the 13 most undervalued blue chip stocks to buy according to analysts we examined multiple similar rankings, our own rankings, and ETFs to come up with the best blue chip stocks. We then chose stocks with a forward P/E ratio that was less than the S&P 500’s (22.68, as of September 22). Finally, we ranked the shortlisted stocks in ascending order of the analyst upside potential, as of September 22, 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A tanker truck making its way through a refinery facility. .
Chevron Corporation (NYSE:CVX)
Forward P/E, as of September 22: 13.0
Analyst Upside Potential, as of September 22: 17%
Number of Hedge Fund Holders: 64
Chevron Corporation (NYSE:CVX) ranks seventh on our list of the most undervalued blue chip stocks according to analysts. The energy and petroleum company is headquartered in California, United States, and is present in more than 180 countries.
In the second quarter of 2024, Chevron Corporation (NYSE:CVX) grew global production by 11%, year-over-year. During the same quarter, the company forged alliances in Namibia, Brazil, Equatorial Guinea, and Angola to expand its exploration base and enhance its acreage position. As for the United States, Chevron’s (NYSE:CVX) net oil-equivalent production increased by 353,000 barrels a day from a year ago. Again, the company attributes such to its successful acquisitions and strategic alliances.
Chevron Corporation (NYSE:CVX) is also making strides in clean and renewable energy. Previously in May, the company operated a gas turbine on a 60% hydrogen fuel blend, significantly reducing emissions. Moreover, the company also owns a 16.5-megawatt wind farm that can power more than 13,000 homes annually.
Overall, Chevron Corporation (NYSE:CVX) reported revenue worth $51.8 billion, up by 4.67% year-over-year, and ahead of market consensus by $453.45 million, in this quarter. The stock has huge potential in the clean energy industry, making it one of the most undervalued blue chip stocks to buy according to analysts.
Analysts are bullish on CVX and their 12-month median price target of $170 points to a 17% upside from current levels. In Q2 2024, there were 64 hedge funds that held positions in the stock with total stakes amounting to $22.41 billion. As of June 30, Berkshire Hathaway was the largest shareholder with a position worth $18.55 billion.
Diamond Hill Capital’s Diamond Hill Large Cap Strategy stated the following regarding Chevron Corporation (NYSE:CVX) in its fourth quarter 2023 investor letter:
“Other bottom contributors included Chevron Corporation (NYSE:CVX), Carrier Global and Becton, Dickinson. Shares of integrated oil and gas company Chevron were pressured as global oil production is growing — particularly in the US, which has now surpassed its past production levels — in turn pressuring oil prices and company profit margins.”
Overall, CVX ranks 7th on our list of most undervalued blue chip stocks to buy according to analysts. While we acknowledge the potential of CVX as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than CVX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
Disclosure: None. This article is originally published at Insider Monkey.