雅虎香港財經 Chevron (CVX) Targeted by Short Sellers: Should You Worry?
Energy major Chevron Corporation CVX emerged as April’s most shorted large-cap stock in the United States, according to Hazeltree’s Shortside Crowdedness Report. This marks a significant shift, as EV maker Tesla had long held the top position among short-sellers.
What Does the Report Say About Chevron?
The report, which compiles data from approximately 700 asset management funds globally, revealed that the total value of Chevron's stock used for shorting surged by more than $500 million last month. This took the percentage of Chevron’s stock being shorted to about 9%, up from roughly 7% in March.
Short selling occurs when a trader sells shares they don't own, hoping that the price will fall. They borrow shares to sell at a high price, then buy them back at a lower price to return to the lender, pocketing the difference as profit. If the price rises instead, they incur a loss. Short interest indicates how many shares have been sold short but not yet repurchased, reflecting the extent of short-selling activity.
Chances of Short-Term Vulnerability
The increased shorting of CVX stock can be taken as a signal that investors have become more bearish toward the company. It also reflects broader market sentiments, and for Chevron, it includes concerns over falling oil prices, the impact of excess natural gas supply and regulatory scrutiny over its proposed acquisition of Hess.
Overall, short-sellers expect the share price of Chevron to fall in the near term. Arguably, the company’s financial performance is heavily dependent on volatile oil prices, while its production growth and high returns are challenging to sustain. Trading at around $164 per share and a 12.06 forward price-to-earnings ratio, CVX is expensive, too. On top of that, there are uncertainties surrounding the merger with Hess.
Our “Hold” Rating Stays Intact
Despite increased shorting, Chevron's shares edged up around 1.4% in April, adding approximately $5 billion to its market value. This performance is notable given the broader context of falling oil prices. During this time, the company also reported better-than-expected Q1 earnings on the back of strong U.S. production in the key upstream segment.
Investors should know that Chevron’s diversified portfolio of assets, both in terms of businesses as well as geographic locations, helps it produce stable results throughout the commodity price cycle. The company’s dominant position in the lucrative Permian Basin, a strong balance sheet and a growing dividend are the other positives in the CVX story. These factors make CVX a Zacks Rank #3 (Hold) company at the moment.
3 Energy Stocks to Buy
While we see CVX as primarily a defensive play, investors interested in the Oil/Energy space could benefit from accumulating stocks like SM Energy Company SM, Marathon Petroleum MPC and APA Corporation APA. SM Energy and Marathon Petroleum currently sport a Zacks Rank #1 (Strong Buy) each, while APA carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
SM Energy Company: SM beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters. SM Energy has a trailing four-quarter earnings surprise of 13.8%, on average.
SM is valued at around $5.6 billion. SM Energy has seen its shares increase 92.9% in a year.
Marathon Petroleum: Over the past 60 days, the Zacks Consensus Estimate for 2024 earnings has moved up 34%.
Marathon Petroleum is valued at around $62.7 billion. MPC has seen its stock rise 63.5% in a year.
APA Corporation: APA is valued at some $11.2 billion. The 2024 Zacks Consensus Estimate for the company indicates 8.4% year-over-year earnings per share growth.
APA beat the Zacks Consensus Estimate for earnings in two of the trailing four quarters and missed in the other two, the average being 5.5%. APA shares have lost 4.6% in a year.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Chevron Corporation (CVX) : Free Stock Analysis Report
APA Corporation (APA) : Free Stock Analysis Report
SM Energy Company (SM) : Free Stock Analysis Report
Marathon Petroleum Corporation (MPC) : Free Stock Analysis Report
