Motley Fool Income Investor James Early thinks it could be a good time to buy Chevron
Mac Greer: OK, James. Chevron is the second-largest oil company in the U.S. And it has a lot of expertise in deepwater drilling. But in the wake of the BP
James Early: Deepwater drilling is a global phenomenon. Many of the nations that possess deepwater oil don't have the expertise to extract it -- Brazil's Petrobras
Greer: Fair points, and I rely on fossil fuels as much as the next guy. But we still don't know the long-term effects of the BP spill, and there's increased interest and investment in alternative energy. Where does that fit into your investment thesis?
Early: Hey, I'm an eco guy, too. I rode a bike -- until it got stolen -- and replaced it with a Prius. For all BP's "green" hype -- pre-oil-spill, I should say -- Chevron outspends BP and its fellow supermajors on alternative energy as a percentage of revenue. It leads the world in geothermal energy production and is the only oil company to have created a legitimate business unit that gets paid to help clients use less energy. France's Total
Greer: So let's talk about some of the bright spots for Chevron. What do you as Chevron's biggest opportunities?
Early: Actually, their biggest opportunity is just plain oil. But simplicity can be endearing (at least my wife apparently thinks so). One thing plaguing most integrated oil companies is that they expanded heavily into refining and natural gas -- ConocoPhillips
Greer: What's the biggest question you have about Chevron going forward?
Early: Aside from standard concerns like the price of oil and state of the economy, I'm keeping an eye on Ecuador, where Chevron is involved in a legacy lawsuit stemming from toxic sludge that Texaco dumped in the Amazon jungle a few decades back (Chevron acquired Texaco in 2001). On a more positive note, it's worth noting how well Chevron partners with state-owned oil companies in the coming years, as its ability to partner with oil-rich nations will increasingly determine its profits.
Neither Mac nor James owns any of the stocks discussed. Chevron, Total, and Petroleo Brasileiro are Motley Fool Income Investor picks. The Fool owns shares of ExxonMobil. Try any of our Foolish newsletters today, free for 30 days. The Motley Fool has a disclosure policy.