Buying Chevron? Consider an Exit Strategy

Don't misunderstand what I'm suggesting here! Trailing stop alerts and having an exit strategy you can live with is not foolproof, as any fool will tell you. In an age of mini-flash crashes I've chosen to use TradeStops, which is an online service that helps me monitor my stocks and my trailing stops without the stock's market maker being able to see my order.

Plus, if a mini-flash crash happens to one or more of my stock positions, I won't be automatically sold out at a ridiculously low price only to see the price rebound right back to where it was in a "flash." I'm doing more independent research on this topic and hope to update you in the near future.

Jim Cramer and Stephanie Link actively manage a real money portfolio for his charitable trust- enjoy advance notice of every trade, full access to the portfolio, and deep coverage of the latest economic events and market movements.

When it comes to Chevron the company, I fundamentally feel comfortable as a shareholder. After CVX's mid-term update report after the market closed Thursday, I'm as encouraged as before. Our research director at TheStreet.com, Stephanie Link, and Action Alerts PLUS co-manager Jim Cramer had the following comments in their report on Friday:

It [CVX's mid-term report] translates into $3.01 for the 4Q earnings, above the $2.98 consensus. We don't expect any material changes to estimates on the news. Upstream volumes have tracked to 676K BOE/d in October/November, which is above the consensus of 650-660K BOE/d due to better liquids and solid international volumes.

Crude price realizations through November were also ahead of expectations. Kazakhstan maintenance has been completed and likely helped the production side and Gulf of Mexico shut-ins have reversed. Downstream volumes are in line, but refining and marketing margins were ahead of expectations.

Shareholders will receive more details when the company reports earnings on Feb. 1, but the Chevron report came as a relief since its last mid-quarter earnings were disappointing. Friday morning Tudor Pickering raised its fourth quarter earnings estimate on CVX by 3 cents to $3.11, which is above the analysts' consensus estimate of $3.04. The firm reiterated its "Hold" rating however.

Even at Friday's closing price of $111.73, the $3.60 current dividend offers a yield-to-price of 3.22%, not too shabby in light of the 10-year Treasury bond yield of 1.88%. The one-year chart below helps illustrate how CVX shares tend to follow a price range which correlates to its price-to-cash-flow (TTM) ratio. CVX Price to Cash Flow TTM data by YCharts

At the time of publication the author had a position in CVX.

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This article was written by an independent contributor, separate from TheStreet's regular news coverage.

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