The only real question related to oil giant Exxon Mobil (NYSE:XOM) is whether it’s too late to buy the company’s stock. Fueled by elevated prices for oil and natural gas, XOM stock has risen 28% this year. And it has largely bucked the market downturn that has pushed both the S&P 500 and Nasdaq indices into a bear market.
But given its big run over the past six months, investors are right to wonder if they’ve missed the boat with Exxon Mobil. Spoiler alert: It’s not too late.
| Ticker | Company | Recent Price |
| XOM | Exxon Mobil | $81.81 |
XOM Stock Pullback
While XOM stock has far outpaced the market this year, it has experienced a pullback in recent weeks as oil prices have softened, providing a decent entry point for investors looking to become Exxon Mobil shareholders. Mounting fears of a global economic recession have pushed the price of West Texas Intermediate crude oil, the U.S. standard, down nearly 20% in recent weeks, falling as low as $98.53 on July 6 from a high of $122.11 on June 8.
The price for WTI is currently trading right around $95 per barrel. That decline has impacted the prices of all major U.S. oil companies, including Exxon Mobil.
Since June 8, XOM stock has dropped 21%, mirroring the decline in crude oil prices. ExxonMobil’s stock fell from a 52-week high of $105.57 on June 8 to its current price of $81.81. The pullback presents an opportunity for investors to buy the dip before the stock recovers and runs higher along with global energy prices, which are expected to remain elevated throughout the remainder of this year. This expectation gains further strength as we enter the cold autumn and winter months when demand for oil and natural gas to heat homes and businesses, especially in regions such as Europe, is forecast to spike.
Bullish Outlook on Exxon Mobil
Analysts seem to agree that XOM stock has more room to run despite the gains it has already achieved this year. At the end of June, Credit Suisse issued an extremely bullish outlook for Exxon Mobil, stating that the stock can gain another 45% this year, despite its run since January. Credit Suisse said that Exxon Mobil, which operates in areas ranging from the Gulf of Mexico and northern Canada to Argentina and Indonesia, has some of the best energy assets in the world. The bank raised its rating on Exxon Mobil stock to “outperform” and placed a $125 price target on the shares.
The median price target on XOM stock is currently $105, implying nearly 28% upside from current levels.
At the end of June, the company finalized a deal with Qatar Energy to increase its liquified natural gas (LNG) production. Exxon Mobil has taken a 6.25% stake in Qatar’s $29 billion North Field East project. The joint project should help to boost the Middle Eastern country’s annual LNG capacity to 110 million tons from 77 million tons by 2026.
XOM stock currently has a price-to-earnings (P/E) ratio of 14.27x, which is in line with other oil majors. And the company pays a dividend that yields a hefty 4.09%, which equates to a quarterly payout of 88 cents per share.
Buy XOM Stock
Energy stocks have been the lone bright spot in an otherwise down market this year. And among publicly traded oil and gas companies, Exxon Mobil is one of the very best stocks an investor can own. The company has producing oil and natural gas sites around the world, is involved in all facets of the energy market, has annual revenues of more than $275 billion and is well-positioned to capitalize on a prolonged rise in oil and gas prices.
Throw in a fair valuation and a solid dividend and it’s easy to see that investors should consider adding ExxonMobil to their portfolio. Buy the dip in XOM stock.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
