I don't see a general thread for stock theses and investment ideas.
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CVX (Chevron) - Energy

In the current environment I have been trying to identify companies that fit a few criteria.

- Stable cash flow
- Healthy dividends
- Room for price appreciation (important that they be ~10% or more off pre-covid peaks)
- Robust business model and competent management.

I was originally drawn to XOM, given how cheap it has been trading, but CVX seems to be the better long-term play. Healthier balance sheet, resilient business model, and cash flow that is levered to oil, with anything above $60 being golden. Immediate price appreciation is a weak point, but I'll set that aside for the ability to buy into a company that looks like it will be in a cash positive situation for a long time.

They're near their pre-pandemic share price now though. RDSB is better value

I'm invested in USO. Rather own the commodity than any of the streams right now.

RDSB's yield is low, so where's the value? Distributions are a proxy for the business' ability to deliver cash flow to shareholders.

This post was edited by bogie160 on Mar 13 2021 01:15pm

They had to cut the 2020 dividend for obvious reasons, but it will increase towards the back end of 2021. It pays quarterly so there is flexibility in upping the Q3 dividend once they can quantify Q2 cash flow

Dividends are a red herring if your investment horizon is more than a few years, as a company that pays a lower dividend is reinvesting it to improve their operational capacity, which in turn will increase share price over a long term horizon. The oil companies paying dividends when they've made huge losses is a sign of poor fiduciary duty

This post was edited by dro94 on Mar 13 2021 01:36pm

That's sort of an incomplete way to look at it. There is only so much capital expenditure required. When you have robust cash flows, you find new ways to return value to shareholders. When your financial situation necessitates a cut to your dividend, it raises questions about the health of your balance sheet and cash flow, hence why Shell is trading at a discount.

As for dividends depressing total returns, that's not necessarily the case. Reinvest and take a larger share in the company over time.

i think financials and oil are solid plays this year. airlines and retail as well. BP is still pretty low, also RDS that dro mentioned. PRU decent yield on the financials side

I get that only so much capital expenditure is required, but Chevron made a $5.5bn loss and they're paying out dividends this month. I don't think that's a draw for buying Chevron

In my view, Shell is at a 'discount' because it's not an American company and, therefore, doesn't have the attention of most investors that focus on US stocks. There is a logic to it - the USA stock market returns have been by far the best in the last 20 years - I just don't see much difference between an Exxon or Chevron and RDS in fundamentals

Boeing is still quite a ways off its pre-covid levels, and is so important to the military and airline industry as a whole that it's basically risk free lol

I still can see BA going back to $300 relatively quick if the yields don't continue to spike.



This graph was when BA was around 250ish

This post was edited by Linux on Mar 13 2021 11:07pm