Is Chevron the Best Energy Stock for You?

There are a lot of ways to invest in the energy sector, but one of the most attractive companies might be (NYSE: CVX). While this industry giant won't appeal to all investors, it offers a strong combination of positive traits that will likely make it appropriate for most investors. Here's why Chevron might just be the best energy stock for you.

Chevron has a market cap of around $280 billion. There are larger energy companies, for sure, but not many. That said, size alone isn't a good reason to buy a company. Luckily, Chevron isn't just big -- it is also vertically integrated. That means it does everything from produce oil and natural gas (upstream) to move these energy commodities around the world (midstream) to process them into fuels and chemicals (downstream). On top of that, Chevron's business is also spread across the globe, adding geographic diversification to the business mix as well.

Being big and diversified in the energy sector is valuable. The price of oil and natural gas, and many of the products into which they get turned, can be highly volatile. As a simple example, upstream profits will get hit hard by low oil prices, but that might actually result in improved performance in the downstream segment of Chevron's business because oil is an input cost. Another potential benefit could come from focusing on producing more in areas with lower costs, like the onshore U.S. region, to take advantage of differences between energy markets.

Continue reading

Source Fool.com