Commodities were out of favor with the market for the 2010s, but have started to see a comeback since 2020. Typically, commodity markets move in a long-term trend, where decade-long moves can play out.
That gives today’s investors in the space ample time to benefit from the trend. Like most trends, it will start slow and build up, ending in a speculative burst. That makes now the optimal time to start buying in.
One strong part of the commodity space is the oil market. Despite the push for green energy, there’s still massive demand for conventional energy.
And after nearing $95 just a few weeks ago, oil prices have pulled back enough to look like a reasonable value now – especially with war potentially breaking out.
That’s where companies like
Chevron (CVX) can help play to the long-term trend while also offering steady growth and income over time.
The company is expanding its operations in conventional energy, which will benefit from the rise of oil prices.
Shares are slightly higher over the past year, and the company looks unprofitable compared to the trailing 12 months. With oil finally moving higher, Chevron’s operations are about to improve.
Action to take: Shares look like a buy here at 10 times earnings. Plus, Chevron pays a 3.7 percent dividend, with a low payout capable of more growth over time.
For traders, shares are likely to trend higher with energy prices. The January 2024 $175 calls, last going for about $5.35, could see mid-double-digit gains in the months ahead.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.
