It seems that Warren Buffett isn’t the only one seeing the value in integrated oil giant Exxon Mobil’s (XOM). Through the third quarter, T. Boone Pickens initiated a new $6.77 million position in Exxon, making XOM stock the second-largest holding in BP Capital’s portfolio.
After suffering under dwindling production, XOM has trailed its peers like Chevron (CVX) in the returns department. However, this past quarter, Exxon finally saw its critical production numbers increase. And with a slate of new projects coming online in the next few years, that trend should continue. Meanwhile, the integrated giant continues to mint cash flows — which it has been graciously giving back to shareholders via hefty buybacks and dividends.
Yet, at just 12x forward earnings, XOM shares are one of cheapest options in the energy sector, not to mention the broader stock market.
Given its growth profile, leadership position, and propensity to produce billions in cash flows, investors should be seriously looking at this “reasonably-priced high-quality bond” with both eyes open. Following Pickens’ lead could result in big returns over the long haul.