The Value Stock Big-Money Managers Are Quietly Buying

Core Viewpoint - The article discusses the increasing investment in Chevron by major asset managers, indicating a potential opportunity in the oil and gas sector as oil prices rebound and Chevron is perceived as undervalued relative to its future potential [1][2][3]. Group 1: Investment Activity - Major asset managers like BlackRock and The Vanguard Group have increased their positions in Chevron, with BlackRock acquiring an additional 20.1 million shares and Vanguard increasing its position by 27.9 million shares [3]. - Fayez Sarofim & Co has also raised its position by approximately 1.3 million shares, reflecting a broader trend of institutional investment in Chevron [5]. Group 2: Valuation and Future Potential - Chevron is currently trading at around 21.5 times forward earnings, which is considered high for an integrated oil and gas stock, but may not accurately reflect its future earnings potential [7]. - Long-term earnings forecasts predict a significant increase in earnings per share from $6.73 to $13.55 within two years, supported by Chevron's focus on cost reduction and cash flow growth [8]. Group 3: Return on Capital and Strategic Initiatives - Chevron's return-of-capital efforts, including a share repurchase program and a dividend yield of 4.1%, are expected to enhance long-term returns for investors [9]. - The company is also investing in projects to provide energy to AI data centers, which could serve as an additional catalyst for stock performance [9].