Is Exxonmobil A Good Stock To Buy |WORK|
If you are looking for an energy stock to add to your portfolio in 2023, you've probably got industry giants ExxonMobil (XOM 1.72%) and Chevron (CVX 0.86%) on your shortlist. That makes complete sense, but which one is a better investment option?
is exxonmobil a good stock to buy
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ExxonMobil's dividend yield is around 3.3% today. Chevron's yield is roughly 3.1%. Those are fairly attractive numbers compared to the broader market, given that stocks in the S&P 500 index have an average yield of around 1.7%. That said, both ExxonMobil and Chevron have seen material price gains since their 2020 lows, when oil prices plunged on demand declines related to the efforts being used to slow the spread of the coronavirus (social distancing and non-essential business closures). So the yields today are much less generous than they were a few years ago (and neither of these stocks looks particularly "cheap" right now).
After reading this, you might feel like the choice between ExxonMobil or Chevron could be decided by tossing a coin. In some ways that is actually true, since they are far more similar than they are dissimilar. But, with a higher yield and a slightly more diversified business, ExxonMobil might be the best option for income investors looking to maximize their income while minimizing risk. Conversely, Chevron could be a good choice if you want to be exposed just a bit more to energy price moves. The differences are, indeed, subtle, but nuance can matter when you add a new stock to your portfolio.
It looks like the 2022 outperformer Exxon Mobil (NYSE: XOM) stock has reached its happy place, hovering not too far away from its all-time high. The stock gained nearly 80% in 2022 (when including dividends), while the S&P 500 (SPX) lost almost 20% in the same period. This question is likely echoing in investors' minds now: is there any point in buying the stock at such high levels, or is it time to sell? Looking at the future plans laid down by the company, as well as the large share buybacks, the future looks good for XOM stock.
The share buyback plan comes at a surprising time as the XOM stock is at its all-time high. Usually, company management resorts to share buybacks when they ascertain that the company shares are undervalued and the time is right to repurchase the shares.
Exxon Mobil's decision to repurchase its stock despite the lofty stock price levels indicates strong management confidence in the future growth prospects of the company. That explains why the elevated stock price didn't discourage management from executing the buybacks.
Given the strikingly high stock price levels, analysts are cautiously optimistic about the XOM stock and have a Moderate Buy consensus rating, which is based on nine Buys and six Holds. As per TipRanks, Exxon Mobil's average price forecast of $119.73 implies a 8.3% upside potential.
Despite its high stock price, XOM stock surprisingly isn't very expensive in terms of valuation. Currently, it's trading at an attractive P/E ratio of 8.9x. Further, its current valuation reflects a massive 50% discount from its five-year average of 17x.
XOM stock displayed record growth in 2022, driven by record-high oil and gas prices. With the recent cooling of oil prices, it will be too optimistic to expect similar growth in 2023. Nonetheless, I believe the stock has long-term growth potential.
The fears of an impending recession and reduced oil and gas prices may impact profits and cash flows in the near term. Longer term, however, the stock is expected to generate handsome returns for investors.
Michael Byrne has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Walt Disney. The Motley Fool recommends the following options: long January 2024 $145 calls on Walt Disney and short January 2024 $155 calls on Walt Disney. The Motley Fool has a disclosure policy.
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Smaller energy companies offer more growth potential. And their stocks would surge much more if oil prices jump back to $70 per barrel or more, up from the current price of $45.30. Yet most major producers have posted steep losses as oil prices crashed, taking their stocks down by 30% or more. Exxon has managed to stay profitable, reporting $16.1 billion in net income last year. The stock, at $88.49, has held most of its value, too, trading just 15% below its all-time high of $104 a share, reached in June 2014. (All current prices are as of April 27.)
Oil major Exxon Mobil (NYSE: XOM) is set to report earnings later this week. With macroeconomic and political pressures sustaining elevated oil prices, the company is currently enjoying fantastic trading tailwinds. That said, some investors are worried that the stock might have already run ahead of itself following its prolonged rally over the past year. In my view, Exxon should continue printing cash at the current commodity prices. That said, at their current valuation, shares might have indeed priced in much of the forthcoming profits, leaving limited upside for current investors.
In any other less-favorable scenario, however, investors could quickly find themselves holding shares that will be trading at a much higher valuation multiple, which could, in turn, trigger a reversal in sentiment toward a multiple compression. Thus, make sure you retain an adequate margin of safety before considering buying Exxon stock.
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In the last year, 12 stock analysts published opinions about XOM-N. 7 analysts recommended to BUY the stock. 2 analysts recommended to SELL the stock. The latest stock analyst recommendation is . Read the latest stock experts' ratings for Exxon Mobil.
Exxon has also benefitted as investors seeking to shield themselves from further Fed-induced volatility piled into defensive-minded oil-and-gas stocks with reasonable valuations and a strong dividend.
DocuSign, which soared throughout the pandemic and was widely viewed as one of the big winners from the shift to the work-from-home environment, has seen its valuation crumble amid steep declines in high-growth tech stocks, especially those that have expensive price-to-earnings ratios.
Disclosure: At the time of writing, Jesse has no position in any stock mentioned. The views discussed in this article are solely the opinion of the author and should not be taken as investment advice.
The fortunes of oil-and-gas companies are inextricably linked to factors out of their control, namely commodity prices and global demand. On the former point, oil stocks staged enormous rallies last year on rising prices. In the past six quarters, earnings grew at triple- or even quadruple-digit rates. In the past three quarters, the average earnings growth rate clocked in at 226%, not something you see outside the world of young, glamorous tech stocks.
The big picture of oil stocks is messy. In recent years, the advancements made by clean energy created long-term questions about the future of oil stocks. As of now, oil is still an essential resource for energy production.
ESG stands for environmental, social, and governance. Investors that opt for this strategy choose stocks that prioritize sound environmental practices. One of the ways investors prioritize the environment is by investing in clean energy technology instead of oil companies.
Throughout 2022, oil stocks have seen an upward trajectory. Many attributed these rising prices partly to the war between Russia and Ukraine. However, crude oil prices have dropped quite a bit from their high point earlier in the year.
Oil stocks might be the right fit for your portfolio goals. Nevertheless, the heightened volatility might mean you must keep a closer eye on industry changes to make the necessary portfolio adjustments.
Despite pleas from politicians to ease the burden on consumers, the biggest U.S. oil explorers are focused on rewarding investors while keeping drilling budgets in check. Exxon tripled its share- buyback program to $30 billion and Chevron said it will repurchase a record $10 billion of stock before the end of this year.
*Exxon Mobil Rewards+ is a rewards program available at participating Exxon- and Mobil-branded service stations. Terms and conditions apply. You must fully enroll to become a member and use points. See exxonmobilrewardsplus.com to complete enrollment. Points have no monetary value and expire after 1 year. You cannot earn Exxon Mobil Rewards+ points for: tobacco, lottery, cash back, gift cards, money order, membership/loyalty, financial prepaid cards, aviation and marine fuels, milk (Pennsylvania, Maine, and Massachusetts) and on negative transactions, fees, miscellaneous prepaid products and tax. In some states, points cannot be earned or redeemed on alcohol purchases. Though you cannot earn points on gift card purchases, taxes or miscellaneous prepaid cards, you can redeem points for these items. 041b061a72