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Jim Cramer Weighs In on Chevron Corp (NYSE:CVX)

We recently published a list of Jim Cramer's Latest Portfolio: 10 Best Stocks to Buy. Since Chevron Corp (NYSE:CVX) is on the list, it deserves a deeper look.

Jim Cramer in his latest program talked about discipline during short-term market rallies and emphasized the importance of knowing when to take some profits off the table when things are going your way. According to Cramer, the “most important lesson” in short-term rallies is that “you always have to work hard to prepare yourself for the future.”

Cramer said that you should not “give in” to the market euphoria and hit “buy, buy, buy” when the market is “roaring.” The CNBC host said for many it becomes difficult to sell because they feel they were late to the rally and want to hold on to their best-performing stocks during bull runs. But Cramer questioned this thinking: if your portfolio sees big gains and you let it “ride” the rally without selling any stocks and eventually those gains begin to “evaporate,” how is that different from totally missing out on the rally? “It isn’t,” Cramer said.

Cramer talked about the post-COVID rally of 2020 and 2021 where the market saw an “unbelievable” bull run, only to pare those gains after the Fed’s pivot and its “war” on inflation. Jim Cramer advised investors to always remain “tethered” to reality.

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“If you would have sold stocks gradually on their way up as I told you to do you’d have been in a much better shape as the market spent the next 11 months getting obliterated,” said Cramer.

For this article we watched several latest programs of Jim Cramer aired over the past few days and picked 10 stocks he’s bullish on. With each stock we have mentioned the number of hedge fund investors. 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).

Jim Cramer Latest Portfolio: Hewlett Packard Enterprise Co (NYSE:HPE) Best Stock to Buy
Jim Cramer Latest Portfolio: Hewlett Packard Enterprise Co (NYSE:HPE) Best Stock to Buy

Photo by Luis Ramirez on Unsplash

Chevron Corp (NYSE:CVX)

Number of Hedge Fund Investors: 62

In a recent program, Jim Cramer said that he “likes” Chevron Corp (NYSE:CVX) because of its 4% dividend yield.

With 37 years of consistent dividend increases, oil giant Chevron Corporation (NYSE:CVX) is one of the best dividend growth stocks to buy according to hedge funds. Chevron Corporation (NYSE:CVX) has been paying dividends without a break since 1984. Its annual dividend growth rate over the past three years is 5.40%. Chevron Corporation (NYSE:CVX)’s payout ratio is  about 56%, which is higher than the industry mean of 45%, but given the company’s huge cash flows and strong fundamentals, dividend safety isn’t a major concern for Chevron Corporation (NYSE:CVX) investors.

Chevron Corp’s (NYSE:CVX) management has pledged fiscal discipline and caution amid massive swings in oil and commodity prices. Analysts believe Chevron Corp (NYSE:CVX) remains well-positioned in the Permian Basin and DJ Basin, with strong production numbers posted in the first quarter. In April, Chevron Corp’s (NYSE:CVX) management said it expects $80/BBL Brent in 2024 and guided for a 4% to 7% increase in total production in the year. Analysts believe this guidance was conservative as continued supply cuts from oil producers would support oil prices.

Analysts also believe now that Hess shareholders have approved Chevron Corp’s (NYSE:CVX) $53 billion acquisition of the company, the deal could go through and help Chevron expand and achieve its goals in Guyana.

Chevron Corp (NYSE:CVX) is expected to see earnings growth of 10.57% in 2025, much higher than Exxon’s 6.72% earnings growth. Given all these growth catalysts, strong fiscal position and dividends, the stock is undervalued, at a forward P/E ratio of 13.89.

Carillon Eagle Growth & Income Fund stated the following regarding Chevron Corporation (NYSE:CVX) in its fourth quarter 2023 investor letter:

“Chevron Corporation (NYSE:CVX) traded lower, along with oil prices, and issued a disappointing earnings announcement due to overseas refining losses. Separately, the company announced an agreement to buy another energy company with operations offshore of Guyana, as well as in North Dakota, the Gulf of Mexico, and the Gulf of Thailand. This is a strategic acquisition for very little takeout premium.”

Overall, Chevron Corp (NYSE:CVX) ranks 7th on Insider Monkey’s list titled  Jim Cramer Latest Portfolio: 10 Best Stocks to Buy. 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 Chevron Corp (NYSE:CVX) but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: Analyst Sees a New $25 Billion “Opportunity” for NVIDIA and Jim Cramer is Recommending These 10 Stocks in June.

Disclosure: None. This article is originally published on Insider Monkey.