CVX

Evaluating the Exposure of Chevron and Exxon Mobil to Russia’s Energy Industry

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Image Shown: Shares of Chevron Corporation (blue line) and Exxon Mobil Corporation (orange line) have skyrocketed over the past six months. By Callum Turcan In the wake of Russia invading Ukraine (again) in February 2022, geopolitical tensions between the West and Russia have reached levels last seen during the height of the Cold War. At the beginning of March 2022, near term WTI and Brent futures were trading north of $100 per barrel while liquified natural gas (‘LNG’) spot prices and European natural gas prices remained incredibly expensive. The supply-demand dynamics for crude oil and natural gas were already tight before this crisis, and in light of the expansive sanctions programs enacted by the West and some of its allies … Read more

Exxon Breaks Out! Oil Prices Might Rip Higher Still!

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Image: A pretty technical breakout at Exxon Mobil. By Brian Nelson, CFA The simulated Best Ideas Newsletter portfolio continues to fire on all cylinders, as we outlined in our most recent email correspondence, which can be accessed here. With Exxon Mobil (XOM), Chevron (CVX), and the Energy Select SPDR (XLE) as key “holdings,” we asked Valuentum’s Callum Turcan what his thoughts were on whether energy resource prices could run higher, and here is what he had to say: The tight supply-demand dynamics for oil & natural gas combined with rising geopolitical tensions (West-Russia over a potential Russian invasion of Ukraine, reports of potential terror attacks on Northern Iraqi/Kurdish oil infrastructure, West-Iran over Iran’s nuclear program and nuclear deal talks reportedly … Read more

Capital Spending a Key Headwind to Broader Markets in 2022

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  The undercurrents of the market in 2022 aren’t as strong as we would like, with the Federal Reserve expected to tighten soon and capital spending expected to increase materially, but we continue to like stocks for the long run and don’t see any reason to make any changes to the newsletter portfolios at this time in light of these observations. By Brian Nelson, CFA One of the biggest themes in 2022 is the amount of money companies will spend in capex (“capital expenditures”). A key reduction to net cash flow from operations to arrive at traditional free cash flow is capital expenditures, and we’re seeing some of the largest companies spend aggressively to the detriment of internal free cash … Read more

Don’t Throw the Baby Out with the Bathwater

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Image: Erica Nicol Takeaways: Junk tech should continue to collapse, but the stylistic area of large cap growth and big cap tech should remain resilient. Moderately elevated levels of inflation coupled with interest rates hovering at all-time lows isn’t a terrible combination. In fact, it’s not bad at all. The markets are digesting the huge gains of the past few years so far in 2022, and the excesses in ARKK funds, crypto, SPACs, and meme stocks are being rid from the system. Our best ideas are “outperforming” the very benchmarks that are outperforming everyone else. The BIN portfolio is down 6.4% and the DGN portfolio is down 3.2% year to date. The SPY is down 7.8%, while the average investor … Read more

Valuentum’s Brian Nelson in CFA Institute’s ‘Enterprising Investor’

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From CFA Institute’s ‘Enterprising Investor’: — By Brian Nelson, CFA — “I couldn’t sleep. I knew something was wrong. The numbers just didn’t make sense. For years, pipeline energy analysts seemed to be adjusting their valuation models for pipeline master limited partnership (MLP) stocks in order to explain what was happening to the price. — But why? Why adjust the models for one set of companies and not for another? Cash is cash and value is the measure of cash going into and out of a business. There aren’t different rules for different companies. Valuation is universal.” — To continue reading >> — —– — About Brian Michael Nelson, CFA Brian Michael Nelson, CFAPresident, Equity Research & ETF AnalysisE-mail: brian@valuentum.com Brian … Read more

Valuentum’s Theses on Best Ideas Chevron and Exxon Mobil Playing Out

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By Callum Turcan Raw energy resources pricing has surged higher during the past year with room to run. The global energy complex is on the rebound as demand for crude oil and refined petroleum products is steadily recovering from the worst of the coronavirus (‘COVID-19’) pandemic. As demand for electricity and heating needs held up well during the pandemic, liquified natural gas prices (‘LNG’) put up a strong year in 2021 and remain elevated. The OPEC+ cartel is committed to slowly phasing out its crude oil supply curtailment agreement first enacted in 2020, effectively limiting growth in global oil supplies at a time when demand is rebounding at a brisk pace. We view the near-term outlook for the global energy … Read more

High Yielding Philips 66 Has a Solid Plan in Place to Reward Its Shareholders

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Image Shown: An overview of Phillip 66’s expansive asset base. Image Source: Phillips 66 – November 2021 IR Presentation By Callum Turcan Demand for diesel and gasoline has largely recovered from the worst of the coronavirus (‘COVID-19’) pandemic, though kerosene demand (jet fuel) has a way to go given depressed levels of international travel. The refining giant Phillips 66 (PSX) took advantage of the rebound seen over the past year to pare down its debt levels on a consolidated basis. At the end of December 2020, Phillips 66 had $13.4 billion in net debt (inclusive of short-term debt) on a consolidated basis, which fell down to $12.0 billion in net debt (inclusive of short-term debt) at the end of September … Read more

Dividend Growth Stocks Soar!

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Dear members: — We’re watching one of the strongest stock market rallies we’ve seen in some time during the trading session December 7. At the time of this writing, the Dow Jones Industrial Average is up over 500 points, the S&P is up nearly 100, while the NASDAQ is up a tremendous 440+. We continue to like what we see. — Almost every idea in the Best Ideas Newsletter portfolio is up today, led by Chipotle (CMG) +5.9%, PayPal (PYPL) +3.3%, Domino’s (DPZ) +3.1%, Apple (AAPL) +2.9% and Alphabet (GOOG) +2.9%. — We’re loving the moves by Valuentum-style stocks today, and we’re even more excited to report that every idea in the Dividend Growth Newsletter portfolio is advancing today, as shown below. We know … Read more

Valuentum Weekly: Nothing Surprising, Well-Positioned!

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Image source: Cathie Wood’s flagship ETF, the ARK Innovation ETF (ARKK) has fallen more more than 40% from its 52-week high. This is nothing short of a complete and utter bloodbath for such an actively-managed fund, in our view. We note this for context. We’re not just talking about one or two or five stocks that are down 40% from 52-week highs, but the *entire fund.* Investors have to keep things in perspective. It’s perfectly reasonable within the context of a portfolio to have a few stocks off 10%, 20%, or maybe even 50% from all-time highs. However, if your entire portfolio is down 40%+ from 52-week highs, you’re doing something wrong. Hi everyone: It’s the most wonderful time of … Read more

Asset Allocators Fail, Advisors Should Pick Stocks, Save Investors $34 Billion Annually

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  Image: The area of large cap growth has trounced that of the 60/40 stock/bond portfolio for more than a decade. Image Source: Morningstar. By Brian Nelson, CFA We’ve all heard the stories. Professional stock pickers can’t beat a bunch of monkeys throwing darts at the pages of the WSJ. A cows’ investment decisions are just as good as the pros’. Stock prices reflect all available information so not even professionals have an edge (e.g. the efficient markets hypothesis). Most professionals can’t outperform their respective benchmarks, so how could mom and pop? Look at this from one of today’s bloggers: The traditional argument, which you’ve probably heard many times before, goes as follows: since most people (even the professionals) can’t … Read more