Chevron: A Prime Opportunity
One company that shines brightly in the Dow Jones Industrial Average is none other than energy titan Chevron. While its shares have dipped by 5% in the past year, Chevron’s outlook for long-term growth is stronger than ever.
Amidst the turbulent times of the COVID-19 pandemic, global energy players like Chevron had to scale back operations. However, with crude oil supply remaining constrained even as spending ramps up, Chevron stands to benefit from the basic economic principle of supply and demand spurring price increases.
Although known for its drilling operations, Chevron’s revenue streams from midstream and downstream operations act as a valuable hedge should oil prices fluctuate. Additionally, Chevron’s imminent acquisition of Hess promises to expand its portfolio significantly, adding valuable assets in the oil-rich Bakken Shale and Guyana.
With a rock-solid balance sheet boasting a mere 8.8% net-debt ratio, Chevron has been able to maintain a dividend-raising streak spanning 37 years and approve a substantial $75 billion share buyback program. Trading at an 11x forecasted EPS for 2025, Chevron stock offers a 23% discount to its historical forward-year earnings multiple.
Amazon: A Retail Goliath
Another Dow Jones standout this May is e-commerce giant Amazon. Joining the Dow recently, Amazon’s reputation as a retail powerhouse precedes it.
While Amazon’s online marketplace dominates global retail, its true cash cows lie in Amazon Web Services (AWS), subscription services, and advertising. AWS reigns as the leading cloud infrastructure platform globally, with massive room for growth as enterprise cloud spending unfolds.
Subscription services, spearheaded by Prime, continue on a trajectory of double-digit expansion. Prime’s subscription base exceeding 200 million and its latest coup securing exclusive streaming rights to Thursday Night Football affirm its market prowess.
Buoyed by the staggering 2 billion monthly visitors to its platform, Amazon capitalizes on its advertising services with revenue growth of 24% in constant currency terms. The company exhibits strength across various sectors, positioning it as a compelling bet in the market.
The Financial Frontier: Where Opportunity and Risk Converge
In the bustling realm of investments, there are entities that surge forward like unstoppable juggernauts, exuding financial prowess like no other. Amazon emerges as a prime exemplar of such excellence. In the March-ended quarter, Amazon proudly showcased its relentless growth streak, boasting a phenomenal 20%-plus year-over-year progression that has persisted for two solid years.
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Unveiling the Gems in the Semiconductor Sector
Meanwhile, the financial landscape also unveils a hidden gem amidst the tumult—Intel. As a venerable semiconductor stalwart, Intel (NASDAQ: INTC) stands as a beacon of resilience amid turbulent times. While facing headwinds from sluggish demand in the personal computer (PC) realm and notable losses from its Foundry Services segment, Intel is a phoenix poised for a riveting resurgence.
The annals of history intimate that rehabilitations in the semiconductor realm often necessitate a substantial gestation period. Nevertheless, there exists a plethora of discernible catalysts that hint at a possible transcendence from the prevailing pessimism surrounding Intel.
Intel’s dominance in the CPU market for PCs and data centers, despite persistent incursions by competitors, underscores its enduring fortitude. While the growth narrative in these segments may have ebbed, they continue to bestow Intel with copious operational cash flow, enabling strategic reinvestment in burgeoning opportunities.
Furthermore, Intel’s foray into artificial intelligence (AI) innovation, epitomized by its revolutionary Gaudi 3 AI-accelerator chip, signals a spirited confrontation with the industry-leading GPUs. As the demand for robust GPUs escalates, Intel finds itself at the cusp of a decisive ascendancy in this dynamic arena.
Although the pursuit of building its Foundry Services segment entails substantial costs, Intel’s endeavors herald a potential turning point in its chip fabrication operations. With projections estimating a quadrupling of its EPS by 2027 to surpass $4, the horizon glimmers with ripe opportunities for astute, long-term investors to seize.
Deciphering Investment Prospects: Navigating the Treacherous Waters
Given this churn of economic activity, discerning investors find themselves at a crossroads, contemplating the wisdom of investing in stalwarts like Chevron. However, prudence demands a careful evaluation of the terrain before plunging headlong into the market currents.
The eminent analyst team at the Motley Fool Stock Advisor unveils a diverse array of investment prospects, singling out the ten premier stocks poised for exponential growth. While Chevron may not feature among the ranked luminaries, the curated selection promises astronomical returns in the foreseeable future.
The acclaimed Stock Advisor service epitomizes a blueprint for investment triumph, offering invaluable insights into portfolio construction, periodic analyst updates, and bi-monthly additions of promising stock picks. Since its inception in 2002, the service has substantially eclipsed the S&P 500’s returns, epitomizing a track record of resounding success.
Amidst this financial odyssey, the narrative underscores a nuanced tapestry of resilience, resurgence, and reinvention. As investors navigate the tumultuous waters of economic uncertainty, strategic foresight emerges as the lodestar guiding their investment voyage towards an elusive yet alluring financial horizon.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Sean Williams has positions in Amazon and Intel. The Motley Fool has positions in and recommends Advanced Micro Devices, Amazon, Chevron, and Nvidia. The Motley Fool recommends Intel and recommends the following options: long January 2025 $45 calls on Intel and short May 2024 $47 calls on Intel. The Motley Fool has a disclosure policy.
