Chevron (NYSE:CVX)

Warren Buffett’s Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) continued to build its positions in energy stocks Chevron (NYSE:CVX) and Occidental Petroleum (NYSE:OXY). It’s worth noting that Chevron is the third-largest holding by market value in Berkshire’s investment portfolio. Chevron stock has rallied nearly 56% year-to-date, thanks to high oil prices due to supply disruption caused by the Russia-Ukraine war. Following such an impressive run, Wall Street analysts seem divided about CVX stock, with oil prices cooling down from the peak levels seen earlier this year.

Buffett’s Berkshire Remains Bullish on Chevron

Buffet’s Berkshire first purchased Chevron shares in Q3 2020. In the first quarter of 2022, Berkshire bought 120.9 million Chevron shares, reflecting a 316% increase in its stake. However, purchases in the second and third quarters were relatively very small. Berkshire increased its holdings in Chevron stock by 2.43% in Q3. Also, Chevron accounted for 8.02% of Berkshire’s portfolio as of Q3-end.

Overall, hedge funds increased their holdings in Chevron by 3.6 million shares last quarter. Based on the activity of 39 hedge funds in the last quarter, Chevron scores a Very Positive hedge fund confidence signal.

Tracking a hedge fund’s stock positions could be very insightful and beneficial for retail investors. Find out which stock the biggest hedge fund managers are buying right now.

Chevron’s Impressive Performance in 2022

Chevron delivered solid results in the first three quarters of 2022, fueled by high oil and gas prices. Last month, the company’s third-quarter results smashed analysts’ expectations. The Q3 adjusted earnings per share increased about 88% year-over-year to $5.56.

The energy giant is using its significant cash flows to boost its production, enhance shareholder returns, and reduce debt levels. In Q3, Chevron paid dividends of $2.7 billion and repurchased shares worth $3.75 billion. Chevron’s dividend yield stands at 3.03%. Moreover, the company’s free cash flow exceeded $5 billion for six consecutive quarters.

Is Chevron a Buy, Sell, or Hold?

Wall Street is cautiously optimistic about Chevron stock, with a Moderate Buy consensus rating based on six Buys, five Holds, and one Sell. The average CVX stock price target of $184 indicates that the stock is fully priced at current levels.

Conclusion

Chevron’s strengths include its solid fundamentals, capital discipline, cost efficiency, and focus on growing traditional as well as lower carbon businesses. Berkshire Hathaway continues to be bullish on Chevron’s long-term prospects. Nonetheless, Wall Street is divided on the stock.

While some analysts believe in Chevron’s continued growth, others do not expect further upside potential in CVX stock, given the stellar year-to-date rally and the decline in oil prices over recent months due to fears of an impending recession.