Chevron Corp.
New York symbol CVX, is the second-largest integrated oil company in the United States after ExxonMobil. Production accounts for about 80% of its earnings. The remaining 20% comes from refineries and retail gas stations.
It pays to include some oil and natural gas stocks in your portfolio, as an inflation hedge and for exposure to the Resources sector. Even so, we still advise against over-indulging in oil and gas stocks. Global demand for oil and gas will continue to rise. But no one can consistently predict oil and gas price prices. Both will continue to go through wild swings in price. So you’ll profit most with highquality stocks that will prosper even during the inevitable price setbacks. These three energy stocks are down from their peaks over the last couple of months, but are still up from the start of this year. Although all are attractive in relation to earnings and cash flow, only two are buys right now....
MOODY’S INC. $46.45, New York symbol MCO, has dropped by a third since the start of June due to the turmoil in the mortgage market. Moody’s charges bond issuers a fee for a credit rating, and the recent problems could hurt investor interest in new debt securities. The company could also face class-action lawsuits from subprime mortgage investors who relied on Moody’s ratings. Politicians will probably call for new controls on rating agencies, which could hurt Moody’s prospects. Our view is Moody’s will overcome these setbacks. But the stock could fall further in the next few weeks....
UNITED CORPORATIONS $68.80 (Toronto symbol: UNC) (165 University Ave., 10th Floor, Toronto, ON M5H 3B8. 416-947-2583. Buy or sell through a broker) invests in a wide variety of average-quality to above-average quality Canadian and foreign stocks. At last report, 31.2% of the fund’s $1.1 billion portfolio was invested in Canadian equities, 26.0% in the U.S., 21.2% in Europe, 8.0% in the UK, 11.7% in Asia and 1.4% in Mexico and Latin America. The fund’s largest holdings included Bank of Nova Scotia, Royal Bank of Canada, Manulife, Talisman Energy, Algoma Central Corporation, Nexen, TransCanada Corporation, General Electric, TD Bank and Chevron....
ALLTEL CORP. $68.60, New York symbol AT, has accepted a $71.50-a-share takeover offer from private investors. The stock is trading below the offer price, which means the likelihood of a better offer is low. However, Alltel has no controlling stockholder, so a competing bid is possible. Alltel is now a hold. MICROSOFT CORP. $30.48, Nasdaq symbol MSFT, has agreed to pay $6 billion for aQuantive, Inc., a publicly traded firm that helps companies improve the effectiveness of their online advertising. Microsoft has roughly $28 billion (roughly $3.00 a share) in cash, so it can easily afford the purchase price....
ECONOMIC INVESTMENT TRUST $99 (Toronto symbol: EVT) holds a well-diversified portfolio of high-quality Canadian, U.S. and foreign stocks. The $691.3 million fund’s largest holdings include E-L Financial, Algoma Central Railway, Chevron, Toyota Motor, Comcast, ConocoPhillips, General Electric, Posco, Renault, Citigroup and Sumitomo Mitsui Financial Group. The fund breaks down geographically as follows: Canada, 46.3%; the U.S., 18.6%, Europe, 19.8%, Asia, 14.4%; and Latin America, 1.1%....
CHEVRON CORP. $78 (New York symbol CVX; Conservative Growth Portfolio, Resources sector; Shares outstanding: 2.2 billion; Market cap: $171.6 billion; WSSF Rating: Above average) has teamed up with WEYERHAEUSER CORP. $77 (New York symbol WY; Conservative Growth Portfolio, Resources sector; Shares outstanding: 241.0 million; Market cap: $18.6 billion; WSSF Rating: Average) to develop new ways to make biofuels such as ethanol out of wood. Right now, ethanol comes mainly from corn. However, rising ethanol production has led to much higher corn prices. Chevron and Weyerhaeuser feel turning scrap wood into ethanol could broaden their revenue sources, and improve their image with politicians and environmentalists. We see both Chevron and Weyerhaeuser as buys....
CHEVRON CORP. $70 (New York symbol CVX; Conservative Growth Portfolio, Resources sector; Shares outstanding: 2.2 billion; Market cap: $154.0 billion; WSSF Rating: Above average) is the second-largest integrated oil company in the United States, after ExxonMobil Corp. The company produces oil and natural gas in 35 countries, and refines oil into gasoline and petrochemical products. It also operates 26,500 gas stations. The U.S. accounts for 30% of Chevron’s total production. In the three months ended December 31, 2006, Chevron’s earnings fell 6.5% to $1.74 a share (total $3.8 billion) from $1.86 a share ($4.1 billion) a year earlier. Revenue fell 11.3%, to $47.7 billion from $53.8 billion....
The Resources and Commodities sector of the economy has gone through a once-in-a-generation price boom in the past few years. Investors generally expect booming demand from India and China to keep prices high. However, this sector has always been highly volatile and subject to sudden downdrafts. We feel the best way to cut your resource risk is to stick with high-quality companies such as these three. They all have a broad range of income streams, which helps them stay profitable, even if prices fall. Hidden or little appreciated assets should fuel their growth for decades. They also have the flexibility to adjust production in the face of lower prices, which conserves cash for dividends and stock repurchases. CHEVRON CORP. $70 (New York symbol CVX; Conservative Growth Portfolio, Resources sector; Shares outstanding: 2.2 billion; Market cap: $154.0 billion; WSSF Rating: Above average) is the second-largest integrated oil company in the United States, after ExxonMobil Corp....
UNITED CORPORATIONS $69.25 (Toronto symbol: UNC) (165 University Ave., 10th Floor, Toronto, ON M5H 3B8. 416-947-2583. Buy or sell through a broker) invests in a wide variety of average-quality to above-average quality Canadian and foreign stocks. At last report, 33.5% of the fund’s $950.7 million portfolio was invested in Canadian equities, 26.7% in the U.S., 19.6% in Europe, 7.7% in the UK and 10.9% in Asia. The fund’s largest holdings included Bank of Nova Scotia, Royal Bank of Canada, Manulife, Talisman Energy, Algoma Central Corporation, Shell Canada, TransCanada Corporation, Altria Group, TD Bank and Chevron....
CHEVRON CORP. $64 (New York symbol CVX; Conservative Growth Portfolio, Resources sector; WSSF Rating: Above average) is one of the world’s largest integrated oil companies. It explores for and produces oil and natural gas in over 35 countries, and operates refineries that convert crude oil into gasoline and petrochemical products. It also owns over 26,000 retail gas stations. The company gets roughly 60% of its revenue from oil and natural gas sales. Refined products supply the other 40%. The United States accounts for half of Chevron’s revenue, and a third of its profit....