Home Investing Is Chevron stock a buy on the dip?

Is Chevron stock a buy on the dip?


Motiur Rahman

Sep 27, 2022

Chevron stock has gained 20% YTD.

Chevron remains one of the most diversified companies for defensive holding.

The stock may correct further following declining crude prices.

Chevron Corporation (NYSE:CVX) has returned to investors massively this year. At a price of $143, the stock has added 20% year-to-date. The stock touched a high of $180 before retreating. There is no hard math to explain Chevron’s strong gains in the year. 

Chevron is a highly cyclical stock. Macro events can dramatically affect the fortune in such stocks. That happened this year as oil prices skyrocketed, helping energy equities to remain investor darlings. However, oil prices are cooling in the global market, and this has dampened the sentiment around the sector.

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Looking at Chevron, the company presents the ideal features of diversification. The company operates with an integrated business model incorporating oil, gas, and refinery segments. The features make Chevron a highly defensive name in good and bad times. As oil prices fall, Chevron benefits otherwise via its refinery segment. 

But then, we cannot evaluate Chevron on alternative segments and ignore the impact of falling oil prices. We already know that the stock skyrocketed following a surge in global crude prices. The stock decline is happening partly because it is now aligning with the market dynamics. 

Source – TradingView

The technical indicators are less convincing if eyeing to snap Chevron stock. The stock broke below the 20-day and 50-day moving averages. The MACD indicator is also almost entering the bearish zone amid waning momentum.

Is Chevron a good stock?

If you are looking to buy Chevron stock, it is a sound stock. However, you should be aware it may continue to fall as oil prices slide. Minor support exists at $138, but there is no indication that a bullish reversal is about to happen. If the level does not hold, the stock could proceed to $114. To a defensive investor, Chevron is a good stock, but it is not the right time to buy.

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