United States President Donald Trump‘s first day in office was marked by several announcements, including one focused on declaring a “national energy emergency” to help bring down prices.
To this end, during his inaugural speech, President Trump highlighted the possible reintroduction of the “drill, baby, drill” initiative, signaling increased domestic oil and gas production.
“America will be a manufacturing nation once again, and we have something that no other manufacturing nation will ever have, the largest amount of oil and gas of any country on Earth, and we are going to use it. <…> We will drill, baby, drill,” Trump said.
This possible policy shift could have notable implications for the energy sector, particularly for companies poised to benefit from deregulation and increased drilling on federal lands.
In this regard, Finbold has identified two stocks likely to thrive in such an environment.
Chevron Corporation (NYSE: CVX)
As one of the largest oil companies, Chevron‘s (NYSE: CVX) market significance makes it well-positioned to benefit in an environment with policies supporting increased exploration.
The company has substantial operations in the Permian Basin, where fracking has been a focus. Notably, the Chevron’s operations in this region are estimated to position it for 3% annual production growth and a 10% free cash flow CAGR through 2027.
Therefore, Trump’s policies supporting the oil sector could signal more opportunities for Chevron to expand its drilling activities.
In addition to favorable policies, CVX offers an ideal investment opportunity, combining reliable income with growth potential with backing from prominent names such as Warren Buffett.
Its 37-year streak of dividend increases, yielding 4.5%, far outpaces the S&P 500 average, supported by strong cash flow.
Additionally, the firm is seeking to expand its business with notable acquisitions, such as the Hess purchase, which could double Chevron’s free cash flow.
However, the company might face investor backlash due to its operations in regions like Venezuela.
While operations in the country could increase production and possibly its stock value, Chevron also risks backlash over human rights concerns linked to Venezuela’s current regime.
Due to controversial elections, the incoming Secretary of State Marco Rubio, is already calling for the U.S. to reconsider the license allowing Chevron’s activities in the South American state.
By press time, CVX was trading at $161, having rallied over 10% in 2024.
Exxon Mobil (NYSE: XOM)
Exxon Mobil (NYSE: XOM) was among the notable beneficiaries of the first Trump administration, and the company’s current market dominance places it in a strong position to reap further from the White House’s push for increased oil and gas exploration.
The Houston-based oil giant’s extensive experience and infrastructure in exploration and refining could see significant advantages from streamlined regulations and expanded drilling rights.
With Trump officially beginning his second term, Exxon has been increasing production in key areas like the Permian Basin under current conditions, which could accelerate with policy support.
At the same time, Exxon Mobil is an attractive option given its valuation. Its forward P/E ratio of 12.41 makes it a relatively cheap option in the market.
The energy sector titan is also driving growth with major Liquefied Natural Gas (LNG) projects like Golden Pass and North Field Expansion and a significant natural gas discovery in Egypt.
By press time, XOM stock traded at $112, reflecting year-to-date gains of almost 5%.
Chevron and Exxon Mobil are positioned to benefit from Trump’s pro-drilling policies, but their performance will depend on market momentum and monetary policy.
Featured image via Shutterstock
Source: https://finbold.com/2-stocks-to-watch-as-trump-declares-drill-baby-drill-return-should-you-buy/