Chevron (CVX +2.70%) stock is surging after U.S. forces raided the Venezuelan capital of Caracas over the weekend, arresting President Nicolas Maduro and his wife on narco-terrorism charges.
On Saturday, President Trump held a press conference repeatedly referencing plans to have "very large United States oil companies ... go in, spend billions of dollars, fix the badly broken infrastructure, the oil infrastructure, and start making money for the country."
Chevron stock is up 5.8% as of 12:45 p.m. ET Monday.
Image source: Getty Images.
Why this is important for Chevron
Chevron is the only major U.S. oil company still operating in Venezuela, and holds a U.S. government license that permits it to do so despite sanctions against the country. Chevron operates as a minority partner of Venezuela's state-owned oil company PDVSA.
ConocoPhillips (COP +2.76%) and ExxonMobil (XOM +1.29%) previously operated in Venezuela, but their assets were expropriated by the Chavez regime that preceded Maduro's.
While both companies would presumably be interested in returning to Venezuela if conditions permit, Chevron is currently the only U.S. oil stock that might immediately benefit from a change of regime and would likely retain a head start over its rivals even if conditions change.
NYSE: CVX
Key Data Points
Is Chevron stock a buy?
Chevron reported $12.8 billion in net profit over the last 12 months, and generated even more positive free cash flow -- $15.4 billion. As a result, while Chevron's stock trades for a hefty 24.5 times earnings, it is cheaper when valued on FCF -- only 20.4 times.
Chevron pays a 4.4% dividend yield, and analysts polled by S&P Global Market Intelligence expect it to grow its profits about 13.5% annually over the next five years. It thus has a total return ratio of only 1.1x -- cheap with or without any future benefit from regime change in Venezuela.
