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Oil and gas supermajor
CVX) is another cash-rich company to buy in 2013. As the No. 2 oil company in the U.S., Chevron produces around 2.6 million barrels of oil equivalent each day -- and sports proven reserves of 11.3 billion barrels. I'd argue that Chevron currently has the most attractive financial standing of any major oil firm right now. While the industry is hugely capital intense, CVX actually sports a net cash position of $3.2 billion on its balance sheet right now.
While oil prices have been coming down in 2013, they've still remained on the high-end of their historic range. As a result, Chevron has been able to keep more wells economically viable, and earn net profit margins in the double digits. One major advantage for Chevron is its production mix. Today, around 70% of production comes from oil, so while rivals have been piling up on natural gas reserves, CVX has been collecting more for its trouble. That should shine through even more in the coming quarter after the correction in natgas that started in May.
As long as Chevron can avoid the temptation of buying costly projects that are on the very edge of economic viability, it should continue to generate impressive cash flows. Currently, CVX pays out a $1 quarterly dividend that adds up to a 3.28% yield.
-- Written by Jonas Elmerraji in Baltimore.
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