Why do Chevron and Exxon Mobil stocks stand out? – Magic Post

Multiple factors, including expectations of a very cold winter and rising natural gas prices, are driving diesel prices higher. The Department of Energy/Energy Information Administration (DOE/EIA) announced a $0.027 increase in the average retail price of diesel, to $3.503 per gallon to close out 2024. This jump coincides with a rise in ultra-low sulfur diesel (ULSD) futures, which rose By $0.055 per gallon to settle at $2.2995, recording a gain of 2.44% and the highest settlement since November 5th.

Natural gas prices have also risen significantly, with the price on the Chicago Mercantile Exchange (CME) up nearly 152% since March 26. These price movements have a significant impact on the transportation sector and the broader economy. As winter approaches and demand for heating fuel increases, there are two companies well positioned to benefit from rising diesel prices.

Why diesel prices matter to investors

The role of diesel extends beyond fueling trucks and heavy machinery. It is a critical component of the transportation, agricultural and industrial sectors. Fluctuations in their prices ripple throughout the economy. When diesel prices rise, transportation costs for businesses increase, affecting everything from shipping goods to operating farm equipment. These increased costs are often passed on to consumers in the form of higher prices for goods and services. For investors, understanding diesel market dynamics is crucial, especially during periods of significant price movement.

The current rise in diesel prices is particularly noteworthy given the relative decline in US inventories of non-aircraft distillates. As of December 20, 2024, these inventories stood at 116.5 million barrels, well below the five-year average (excluding 2020) of 125.4 million barrels. This combination of rising demand, driven by cold weather forecasts, and relatively low supply, creates a favorable environment for energy companies.

The high demand for diesel leads to increased revenues and profitability for those working in its production, refining and distribution. Furthermore, the market is anticipating the release of economic data, including China’s factory PMI surveys and the US ISM survey, which could provide more insights into global oil demand. These factors, coupled with the potential for increased demand for diesel as an alternative to natural gas in heating, create a compelling investment case for stocks in the energy sector.

Chevron: a wise investment in the energy sector

Chevron today

$147.85 +1.14 (+0.78%)

As of 03/01/2025 at 05:45 PM ET

52 week range

$135.37

▼

$167.11

Dividend yield

4.41%

P/E ratio

16.25

Price target

$175.19

Chevron company New York Stock Exchange: CFX It is the second largest integrated oil company in the United States and is a prime example of a company poised to take advantage of current market conditions. With a market capitalization of approximately $265 billion and operations spread across the globe, Chevron’s diversified business model spans both upstream and downstream business segments. This vertical integration allows the company to capture value across the entire energy supply chain, from exploration and production to refining and marketing.

Chevron is a dividend aristocrat with 37 years of consecutive dividend growth. The company recently declared a quarterly dividend of $1.63 per share. The announcement follows a strong performance in the third quarter of 2024, during which Chevron reported earnings of $4.5 billion and record cash flow from operations of $9.7 billion. These positive results, combined with a strong balance sheet, highlight Chevron’s financial strength and ability to provide investors with capital appreciation and a steady income stream, with a current dividend yield of 4.40%.

Chevron is focusing on streamlining its operations and reducing costs. The company is targeting structural cost reductions of $2-3 billion by the end of 2026. Part of this initiative includes planned restructuring charges ranging from $0.7 to $0.9 billion after taxes in the fourth quarter of 2024. While these charges represent costs Short term and is expected to contribute to improved efficiency and profitability in the long term. Chevron is also working to improve its investment portfolio, as evidenced by the announced $6.5 billion sale of its Canadian assets.

ExxonMobil: a leading global energy company

ExxonMobil today

$107.86 +0.55 (+0.51%)

As of 03/01/2025 at 05:45 PM ET

52 week range

$95.77

▼

$126.34

Dividend yield

3.67%

P/E ratio

13.43

Price target

$128.74

Exxon Mobil Company New York Stock Exchange: Gold It is also one of the largest publicly traded international energy and petrochemical companies in the world. The company creates another compelling investment opportunity in the current market environment. With a market capitalization of approximately US$475 billion and operations spread across the globe, ExxonMobil is a major player in all aspects of the energy industry. ExxonMobil’s third-quarter fiscal 2024 earnings report (Q3FY24) revealed earnings of $8.6 billion, or $1.92 per share, demonstrating its continued financial strength. The company announced that it achieved a record production of liquids amounting to 3.2 million barrels per day.

Like Chevron, ExxonMobil is a dividend aristocrat, boasting that it has increased its dividend for 42 consecutive years. The company announced a fourth-quarter dividend of $0.99 per share, an increase of 4%. The current dividend yield of 3.66% provides investors with a reliable source of income. ExxonMobil is committed to returning value to shareholders and has a stated goal of repurchasing more than $19 billion in stock in 2024. ExxonMobil has demonstrated its commitment to rewarding shareholders through sustained earnings growth and stock repurchases, which enhances its attractiveness to investors.

ExxonMobil is focused on improving its operations and achieving structural cost savings. The company has already achieved cumulative structural cost savings of $11.3 billion, and is on track to achieve total savings of $15 billion by the end of 2027. In 2025, the company will continue to prioritize high revenue and low cost. Supply investments, with cash capital expenditures expected to range between $27 billion and $29 billion.

Strategic winter investment

The current rise in diesel prices is due to a combination of seasonal constraints on demand and supply, which provides a compelling investment opportunity in energy stocks. Chevron and ExxonMobil, with their strong financial positions, diversified operations and commitment to earnings growth, are particularly well positioned to benefit from this trend. As winter approaches and demand for heating fuel increases, these companies are poised to see an increase in revenues and profitability.

Chevron and Exxon Mobil offer attractive investment opportunities for those looking to take advantage of the expected winter price increase. Both companies offer a balance of income and growth potential through strategies that position them for continued success in the changing energy landscape. Their commitment to long-term value and investments in low-carbon technologies make them suitable choices for beginner and mid-range investors navigating the dynamic energy market. Adding these stocks to portfolios before winter prices rise can be a strategic move for potential profit.

Before you consider ExxonMobil, you’ll want to hear this.

MarketBeat tracks the highest-rated and best-performing research analysts on Wall Street and the stocks they recommend to their clients on a daily basis. MarketBeat identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches up… and Exxon Mobil wasn’t on the list.

While Exxon Mobil currently has a “Moderate Buy” rating among analysts, top-rated analysts believe these five stocks are better buys.

View the five stocks here

Are you wondering what stocks will be the next big hit, with strong fundamentals? Click the link below to learn more about how your investment portfolio can thrive.

Get this free report