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Buy Exxon Mobil Stock


Buy Exxon Mobil Stock

Over the past year, ExxonMobil's (XOM 0.49%) stock has rocketed higher by 48%, outdistancing all of its closest peers and the broader market, with the S&P 500 index falling around 7% over that span. Driving that stock performance strength has been a very strong business. It's also why investors need to step back and question whether or not the impressive stock gains can keep going.

Also notable, the company strengthened its balance sheet by paying down debt. Only one major peer has a stronger financial position (Chevron has no debt at the moment). ExxonMobil's roughly 0.2 times debt-to-equity ratio would be considered strong for any company in just about any industry. And the board hiked the dividend again, bringing the consecutive streak of annual increases to a very impressive 40 years. Now add in a 3% dividend yield, which is well above the 1.6% you'd get from the average S&P 500 stock, and you might wonder if ExxonMobil is a buy today.

Investors tend to be an excitable group, often taking current trends and extending them way too far into the future. When it comes to the energy sector, which has proven over time that it is highly cyclical, that's a bad call. ExxonMobil is producing stellar results during the current industry upturn, which is great news, but not enough to make it worth buying. It would be much better for investors to put this stock on their wish lists and patiently wait for the next industry downturn when nobody seems to love it anymore.

Exxon Mobil stock last closed at $109.49, up 0.49% from the previous day, and has increased 30.69% in one year. It has overperformed other stocks in the Oil & Gas Integrated industry by 0.31 percentage points. Exxon Mobil stock is currently +38.09% from its 52-week low of $79.29, and -8.48% from its 52-week high of $119.63.

Exxon Mobil pays a dividend of 3.27%, compared to the Oil & Gas Integrated industry's average dividend yield of 8.11%. If you owned $1,000 of XOM stock, you would have received $32.70 in the past 12 months.

Exxon Mobil (XOM) beat the odds. After being removed from the Dow Jones Industrial Average in August 2020 after 92 years, the stock used a comeback in oil prices in 2022 as the catalyst to prove its worth. But has XOM stock reclaimed the throne of the energy industry And have oil stocks already peaked Or is Exxon Mobil just getting started

The oil giant's XOM stock started advancing in the beginning of 2022, first in response to rising oil prices and then as a reaction to Russia's attack on Ukraine. But as oil prices receded back below $100 a barrel in July 2022, Exxon Mobil led a charge from September lows to show investors that its increased production, rising profitability, and a planned expansion of its refinery business was not just a fluke.

Biden attacked oil giants in last week's State of the Union address, saying their 2022 profit numbers were "outrageous" and criticizing their stock buybacks. He said they did too little, too late to reduce high energy prices, as oil hit over $100 per barrel in the summer of 2022.

So far, no major analysts have downgraded or upgraded Exxon stock in the past couple months, although Cowen, Goldman Sachs, Wells Fargo, BofA Securities and Truist Securities recently increased their target price on the stock.

Rivals are also moving in to expand shale holdings. In July 2020, Chevron announced it was buying Houston-based oil and gas independent producer Noble Energy in an all-stock deal valued at $5 billion. Noble has 92,000 acres in the Delaware Basin of the oil-rich Permian.

As with other oil stocks, Exxon will rise and fall with crude oil prices. So even when Exxon looks good based on fundamentals and technicals, crude oil prices may suddenly plunge, taking XOM stock down, too.

Mutual funds have been adding the oil stock, with 3,240 owning shares in December, up from 3,065 in September. The CAN SLIM investing strategy looks for increasing institutional ownership for conviction.



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