Headquartered in San Ramon, California, US, Chevron is an integrated energy company with operations in over 180 countries around the world. The company operates through two primary business segments: Upstream and Downstream. The upstream segment involves the exploration and production of crude oil and gas, whereas the downstream segment involves refining, transportation and marketing. Chevron also has a footprint in the sustainable energy space with operations in wind, hydrogen, biofuels, fuel cells, as well as geothermal energy.
The company was founded in 1906 following the merger of Pacific Oil Company and Standard Oil Company of Iowa. But the Chevron story goes even further back. In 1876, Star Oil company discovered oil in the northern fields of Los Angeles, virtually marking the beginning of the oil industry in California. Then, in 1879, Charles Felton and other investors founded the Pacific Coast Oil Company that acquired the assets of the Star Oil company. By 1900, the company became part of Standard Oil, going on to become the dominant player in the California oil industry by the late 1920s.
The name Chevron started appearing on some of their products as early as the 1930s, but it was not until 1977 when Chevron USA was incorporated after six domestic companies involved in the oil and gas industry merged. Chevron is credited with discovering the largest oil field in Saudi Arabia in 1948 through its subsidiary, a company that would later become the infamous Saudi Aramco, one of the largest companies in the world in terms of revenues.
To maintain its oil and gas reserves, Standard Oil of California merged with Gulf Oil in 1984, and also officially changed its legal name to Chevron Corporation. The company now has a presence in over 180 countries and is part of the ‘supermajors’ or ‘Big Oil’, which represents 7 of the largest publicly traded oil companies in the world as of October 2020.
Chevron Corporation is listed on the NYSE where it trades under the ticker symbol CVX. It falls in the Energy sector, under the Oil & Gas Integrated industry. Chevron was itself a product of a merger, and it has always maintained an active portfolio to protect its status as one of the foremost energy companies in the world.
As well, energy is an ever-changing sector, and mergers and acquisitions enable firms to achieve sustainable growth and innovation. Chevron’s biggest deals include the $45 billion merger with Texaco in 2000; the 2019 $33 billion acquisition of Anadarko; and their 2020 $5 billion all-stock buyout of Noble Energy.
Chevron Stock History
The Chevron stock has had a rich and exciting history. Since 1990, up until October 2020, the company has implemented two stock splits: a 2-for-1 on 13th June 1994; and a 2-for-1 on 13th September 2004. In those days, splits were implemented to promote demand and liquidity of the stock, but such inefficiencies have since been eliminated by technology.
Adjusted for splits, the Chevron stock traded at circa $11 in the 1980s, but it accelerated growth in the 1990s and managed to hit the psychological price of $50 in mid-1999. Following the boom of oil prices at the turn of the millennium due to the Gulf War, the Chevron stock finally broke above the $50 barrier and drifted to highs of just above $100 by mid-2008. The global financial crisis was harsh to the oil sector and the price of the commodity tumbled from highs of circa $150 per barrel to lows of circa $50. This sent the Chevron stock to lows of circa $60.
A rebound in prices would provide tailwinds that sent Chevron stock to its all-time highs of circa $135 in July 2014. After that, a long-lasting suppression of oil prices has punished the energy sector, but Chevron demonstrated resilience and continued to trade above $100 until the start of 2020 when the coronavirus pandemic inspired a dip in demand for oil.
The Chevron stock is still attractive for investors because the company is diversified in the entire oil and gas space. Chevron has always been a generous dividend payer and committed to increasing payouts even during tough periods in the energy sector. Dividends add to the overall returns an investor accrues on top of higher stock prices. With a dividend yield of around 4%, Chevron is one of the Dividend Aristocrats in Wall Street.
How to Trade Chevron Stock
Here are some of the factors to consider when trading Chevron stock:
- Tariffs and Trade Agreements
Chevron has operations in over 180 countries around the world. This means that it is important to keep track of tariffs and trade agreements between different jurisdictions which may have an impact on Chevron’s overall margins.
- Legislative and Taxation Policy
Chevron operates in an industry where legislation and taxation are constantly reviewed. Oil is an important commodity, and many governments use legislation and taxation to control its consumption and circulation. This could have a significant impact on the company’s bottom line.
- Lawsuits and Negative PR
As a long-standing player in the volatile oil industry, Chevron has predictably had numerous controversies in its history. The company has been the subject of negative PR, such as oil spills in Rio de Janeiro and Angola; as well as lawsuits in Ecuador, Niger and the US. Such headlines usually trigger negative sentiment from investors who could, in turn, punish the stock.
- Periodic Earnings Reports
Chevron’s fiscal year runs from January to December, and the company releases quarterly and annual corporate reports, which update investors on the health of the company’s business as well as future prospects. It is important to keep track of the earnings calendar because positive numbers usually trigger higher stock prices, whereas weak figures can inspire a negative price movement.
Why You Should Trade Chevron, on AvaTrade MT5
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Chevron Stock FAQ
- Why should I trade Chevron shares?
Chevron is considered as one of the seven oil ‘majors’, and in 2014 was ranked third in the Fortune 500. With operations in over 180 countries it is a truly global oil and gas operator, with business activities in all areas of the oil and gas industry. Chevron is also considered one of the strongest companies as the oil industry fought through the 2020 coronavirus pandemic, and should be an excellent stock to trade as the oil industry begins to see demand recovering in 2021. Traders won’t want to miss out on that recovery.
- Is Chevron the best integrated oil stock for trading?
Chevron is not only one of the most powerful integrated oil and gas companies on the planet, its stock is an excellent target for day traders and swing traders. It can also provide opportunities for scalpers during times of turmoil in the oil markets. The stock does have both good liquidity and good volatility, which is exactly what traders want in a trading stock, as opposed to an investing stock. The volatility creates spikes and dips in price that can potentially provide good profits for those who can recognize when opportunities arise.
- What’s the best strategy for trading Chevron shares?
In 2021 Chevron could potentially see a strong uptrend as oil demand recovers from the COVID-19 pandemic. If that’s the case traders should be ready to buy on dips in the stock and ride it higher. Alternatively, we could see a return to the sideways trading seen from 2017 to early 2020. If that happens, a strategy that looks for the support and resistance levels in the stock should perform well. In either case traders should use a strategy that includes stop-loss and take profit levels.