We have done well in recent years in Value Authority by staying away from energy stocks, given their performance has, for the most part, been lackluster at best.

However, I believe now may be the time to pick up some exposure. Some of the global ISM reports released on Monday showed that the manufacturing economy may be bottoming out, despite the weakness in the U.S. report. I believe we could see firmer demand for oil next year, with a chance of less supply, should OPEC cut production on Thursday, which I believe is a real possibility given the pressure in oil prices since October.

I want stay conservative in dealing with energy stocks, and to that end I am recommending Chevron (CVX). Chevron is a quality operator that has handled the downturn in oil prices in recent year well. With strong cash flow and a dividend yield of over 4%, I look for big money to flock to the name should oil stocks become fashionable again. I will have more details in next Tuesday’s update, but for now, buy CVX under $119. My target is $130.