We recently compiled a list of the Jim Cramer on Tesla and Other Stocks. In this article, we are going to take a look at where Chevron Corporation (NYSE:CVX) stands against the other stocks Jim Cramer is talking about.
Jim Cramer, host of Mad Money, emphasized the ongoing significance of fossil fuels in supporting technological advancements, even as investments in renewable energy continue to increase. He stated:
“This is not just a grudge match between the old and the new, a battle of electric vehicles versus internal combustion. The truth is, fossil fuels are essential for a lot more than vehicles, like it or not.”
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Cramer highlighted the growing energy demands of major tech companies, noting that the data centers they are constructing consume vast amounts of electricity. While these tech giants are making substantial investments in nuclear energy, he pointed out that this power source is unlikely to significantly impact data centers for at least another decade due to the complexities of building nuclear facilities and community resistance to having them nearby.
“If we need more energy, we’re going to get it from what comes out of the ground … fossil fuels that will power the data center, specifically natural gas… You may be reluctant to invest in it, you might think who cares, but you need to know how vital all of this fossil fuel technology is to the growth of the Magnificent Seven.”
Cramer also reflected on the shift in the U.S. energy landscape, recalling how the nation was once heavily reliant on OPEC for oil imports just two decades ago. Today, he pointed out, the U.S. produces over 13 million barrels per day, making it the largest oil producer globally and a net exporter. He mentioned the Permian Basin’s unexpected resilience, continually producing despite earlier predictions of depletion.
Cramer noted that the decline of OPEC has transformed the geopolitical landscape. He referenced the 1973 oil crisis, triggered by OPEC’s retaliation against U.S. support for Israel, which led to stagflation and economic turmoil. In contrast, he pointed out that despite Israel’s current conflict, the U.S. economy is not experiencing stagflation or recession, resulting instead in a bull market. He attributed this stability to the industry, saying:
“… This industry that spent billions upon billions of dollars to try to be as low carbon as possible is the reason why oil prices have actually come down during this period. They’ve gotten so much production that OPEC is now powerless.”
Turning his attention to the broader oil industry, Cramer explored the role of oil service companies that facilitate production, including offshore drillers. He recalled becoming optimistic about oil service stocks earlier in the year, anticipating higher energy prices but admitted that this expectation did not materialize due to economic concerns dampening oil and gas markets. Despite current investor reluctance toward oil service stocks, Cramer suggested that sentiment could shift over time, especially because of the Federal Reserve’s recent rate cutting.
“Now that the FED is our friend and more rate cuts are on the table, that’s good news for the industry. I am not worried about the election either. If Trump wins, maybe we’re back to that “drill baby drill” thing. If Harris wins, we get exactly what we’ve had the last four years. Not ideal for the industry but it’s still led to record oil and gas production here in the United States.”
Our Methodology
For this article, we compiled a list of 14 stocks that were discussed by Jim Cramer during his episodes of Mad Money on October 23 and 24. We listed the stocks in ascending order of their hedge fund sentiment as of the second quarter, which was taken from Insider Monkey’s database of more than 900 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
Cramer, while visiting Chevron Corporation’s (NYSE:CVX) Anchor floating production unit (FPU), called the company big. He also remarked:
“CEO Mike Wirth… did not spend more than $5 billion on this thing [FPU] because fossil fuel powered cars will be a niche business.”
During the interview with Cramer, Mike Wirth, CEO, emphasized that the demand for electricity in the U.S. will keep rising, highlighting the necessity for various energy sources, including wind, solar, and natural gas. He also mentioned that despite the increasing popularity of electric vehicles, combustion engines continue to play a vital role and are still being produced in large quantities.
Cramer also mentioned that the company stagnates “because it’s hostage to oil and gas prices”. He went on to talk about the celebration of American ingenuity and said:
“… and it’s pretty darn hard to find a better example of that than Anchor, the gigantic floating oil platform in the Gulf of Mexico that I’m standing on right now… Anchor, this production unit that’ll be producing 75,000 barrels a day for years or even decades, given that there [is] more than 400 million barrels of oil beneath my feet… More important, it can maintain pressures of 20,000 pounds per square inch, which could unlock all sorts of offshore oil sites that were pretty much previously inaccessible.”
Chevron (NYSE:CVX) operates in the energy and chemicals sector both in the United States and internationally. The company focuses on the exploration, production, and transportation of crude oil and natural gas, as well as refining crude oil into various petroleum products and manufacturing renewable fuels and petrochemicals.
Chevron (NYSE:CVX) has strategically positioned itself to navigate various market conditions, including potential downturns. Its stress test showed that it can sustain its operations even if the price of Brent crude oil averages $50 from 2025 to 2027. Even in such a scenario, the company will be able to generate sufficient cash flow to support a capital program that emphasizes high-return projects, alongside a steadily increasing dividend, which has been a consistent feature for over thirty years.
Additionally, a key area of focus for the company is the Permian Basin, a region known for its rich oil reserves. The company aims for substantial production growth in this area, setting a target of nearly 4 million barrels of oil equivalent per day by 2027.
Overall CVX ranks 6th on our list of stocks Jim Cramer is talking about. 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.
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Disclosure: None. This article is originally published at Insider Monkey.