Oil giant Chevron Corporation (NYSE:CVX) is one of Cramer’s top stocks in the space as he has repeatedly praised the firm for more than a year. While his earlier remarks about the company focused on factors such as its dividend and operational presence, more recently, Cramer has also started to discuss Chevron Corporation (NYSE:CVX) CEO Mike Wirth’s personality. In a recent appearance, he praised Wirth’s calm and steady nature, and in his morning appearance on September 15th, Cramer discussed Wirth in the context of the recent turmoil in the energy market:
“Yeah, Mike has been, I think, a beacon of rationality during this period that does not speak in any way to his previous views, that something clearly has changed.”
For Mike Wirth and Chevron Corporation, it’s all about whether the movement in oil prices is sustainable and whether they can sustainably grow in spite of cyclicality in the energy market. On the latter front, the cyclicality has served the firm so well that Cramer has remarked on multiple occasions that the shares could very well serve as a proxy for the conflict in Iran.
As an example, Chevron Corporation’s second quarter saw the firm grow its revenue by 56%, its global upstream production by 20% and its US upstream production by 22.5%. Crucially, the firm reached the ‘plateau’ for production in the Permian region. Its Permian production reached one million barrels in the quarter, which has led the firm to claim that capital intensity in the region should dip by 25% in 2026 over 2025 levels. Additionally, while the business might be cyclical, Chevron Corporation is a top dividend stock as it has increased its dividend for 39 straight years.
The firm’s Hess acquisition has provided it with additional growth to mitigate cyclicality. Furthermore, Chevron Corporation also plans to grow free cash flow and earnings per share by 10% annually through 2030 at a crude oil price assumption of $70 per barrel. The growth is expected to come on the back of a 2% to 3% expansion in annual production. Consequently, the firm’s narrative depends on the execution of these goals.
Yet, the focus on oil growth can be Chevron Corporation’s Achilles’ Heel. The firm is primarily dependent on oil as its bread and butter, while peers such as Shell and Exxon have diversified their business to include liquefied natural gas (LNG) as well. Additionally, Chevron Corporation’s investments in regions such as Venezuela and the Middle East are subject to geopolitical risk and could create tailwinds with respect to the firm’s production, cash flow and earnings growth targets.
Looking at hedge fund sentiment, 101 funds tracked by Insider Monkey had held a stake in Chevron Corporation in Q2 which marked little movement over the 103 in Q1. In comparison, 96 had held a stake in XOM and 49 had held a stake in Shell. Looks like the hedge funds also favor Chevron Corporation over peers. On the valuation front, the stock trades at a forward P/E ratio of 16.26 which is higher than Shell’s 10 and roughly in line with Exxon’s 15.5. Short interest as a percentage of float is negligible on a standalone and on a comparative basis.
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