We recently published a list of 10 Worst Performing Dow Stocks Year-to-Date. In this article, we are going to take a look at where Chevron (NYSE:CVX) stands against other worst performing dow stocks year-to-date.
After the disastrous performance of 2022, the market has recovered better than expected and is on a growth trajectory. According to BlackRock’s Q4 2024 Equity Market Outlook, despite concerns about the economy, fundamentals have kept stocks resilient. Opportunities are seen in large-cap stocks, which may outperform both mega and small caps.
Volatility is viewed as normal and can create buying opportunities, especially when driven by market sentiment rather than fundamentals. Historically, market corrections of 10% or more are common but long-term investors have still enjoyed solid returns.
The report states that elections and Fed rate cuts may also impact the market, with rate cuts typically benefiting large-cap and high-quality stocks. Healthcare and consumer staples sectors have traditionally performed well after rate cuts, while cyclical sectors may improve as the economy recovers.
Finally, it mentioned that technology, which is usually a laggard in rate-cutting cycles, looks well-positioned this time due to innovations like AI. Long-term patience is essential in navigating volatility, as the market has proven resilient over decades through various crises.
READ ALSO 8 Best Communication Stocks To Buy According to Analysts and 10 Worst Performing Blue Chip Stocks in 2024
Evaluating Volatility and Valuations in Today’s Stock Market
In a CNBC interview, chief strategist and economist of Solus Alternative Asset, Dan Greenhaus discussed stock market volatility, with mega-cap earnings and the upcoming election contributing to potential fluctuations. He mentioned that the market is already experiencing some volatility, as reflected in the elevated VIX. Despite this, he highlighted that the economy is still growing, albeit at a slower pace, and earnings are rising, which is creating a generally favorable environment for equities.
Greenhaus also addressed concerns about market valuations and noted that while current multiples are high historically, determining what constitutes “rich” valuation levels can be difficult without hindsight.
Lastly, Greenhaus referenced a trading strategy of “buying high and selling higher,” suggesting that investors should remain engaged in the market even during record highs.
Our Methodology
For this article, we checked the year-to-date performance of all the Dow components and selected 10 stocks out of 30, that had the worst share price performance on a year-to-date basis on October 21. We listed the stocks in descending order of their share price performance. We also mentioned the hedge fund sentiment around each stock which was taken from Insider Monkey’s Q2 database of 912 elite hedge funds.
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).
An aerial view of an oil rig at sea, the sun glinting off its structure.
Chevron Corporation (NYSE:CVX)
Number of Hedge Fund Holders: 64
Share Price Performance Year-to-Date: 0.94%
Chevron Corporation (NYSE:CVX) is a global energy company with a significant presence in oil, natural gas, and is also making moves in alternative energy sectors. It operates in over 180 countries and is engaged in oil and gas exploration, production, refining, and marketing, along with power generation.
While Chevron (NYSE:CVX) is a strong company, its price decline is tied to its industry. As of October 18, the Energy Select Sector SPDR Fund (XLE) has gained slightly over 6.5%, underperforming the broader market significantly. It is one of the reasons why the company has been one of the worst performing Dow stocks.
According to the International Energy Agency’s (IEA) September report, global oil demand growth is slowing down, with only an increase of 800 thousand barrels per day (kb/d) in the first half of 2024, the lowest increase since 2020. The decline is mainly due to a significant drop in oil use in China, which saw a decrease of 280 kb/d in July, marking the fourth straight month of lower demand. IEA projects that global oil demand is expected to grow by 900 kb/d in 2024, down from 2.1 million barrels per day (mb/d) last year, and by only 950 kb/d in 2025.
In addition to that, Chevron (NYSE:CVX) is engaged in a competitive bid with Exxon Mobil for a $53 billion acquisition of Hess, which holds a significant stake in Guyana’s oil-rich Stabroek block. Exxon has filed an arbitration claim to potentially block the merger and argued that it has the right of first refusal on Hess’ Guyana assets due to its majority stake in the consortium. This could delay Chevron’s (NYSE:CVX) deal, with Exxon leaving open the option of a settlement.
Analysts are still bullish on the company as 19 out of 27 analysts that have covered the stock maintain a Buy-equivalent rating on it. On October 17, The Fly reported that Bank of America resumed its coverage of the company stock with a Buy rating and a price target of $168.
BofA believes that the recent decline in Chevron’s (NYSE:CVX) stock value, influenced by its acquisition of Hess, has caused a temporary drop in its rating. However, the firm believes that the oil giant’s core business is strong and offers good value at its current price.
Overall, CVX ranks 5th on our list of worst performing dow stocks year-to-date. 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 timeframe. 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: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.
Disclosure: None. This article is originally published at Insider Monkey.