Chevron: A Defensive Value Investment As Oil Drilling Falters Demand Concerns
Summary
- Gasoline prices are down again due to global demand concerns. The average US retail gas price is $3.3, down from nearly $3.8 in May.
- This year, energy is the worst-performing sector, as investors view oil as cyclical after 2008 and 2020 despite its historically non-cyclical pattern.
- The Federal Reserve's surprisingly quick dovish shift and geopolitical should encourage investors to look toward supply side inflation hedges.
- Chevron's strong balance sheet, low debt-to-equity ratio, and strategic acquisitions position it well for future growth despite its slightly higher valuation.
- In a recession, Chevron's diversified operations and consistent dividend make it a safer bet, particularly given US drilling activity has already declined due to concerns of a slowdown that may not occur.
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2024 has been a strong market year, with most high-performing sectors continuing to rise and interest-rate sensitive segments like REITs and utilities rebounding on a lower rate outlook. The worst-performing sector year-to-date is Energy, with The Energy
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