What’s your priority as an investor? Maybe it’s income opportunities. Or, you might seek a good value. Perhaps you only buy stocks with strong upward momentum. But if your answer is “all of the above,” then you’ll definitely want to take a look at Exxon Mobil (NYSE:XOM) stock.
Some financial traders might have reservations about investing in Exxon Mobil. That’s because they’re not seeking direct exposure to the oil market. Maybe they’re concerned about oil-price volatility, and that’s understandable.
Still, it’s worthwhile to conduct your due diligence on Exxon Mobil. At the end of the day, you might actually consider owning a share position in this famous oil-and-gas giant.
An Oil Shock Could Benefit Exxon Mobil
Like other U.S. oil majors, Exxon Mobil is making investments in clean energy. However, Exxon Mobil certainly hasn’t abandoned its bread and butter, which is fossil fuels.
And, like it or not, pain at the gas pumps will almost certainly benefit Exxon Mobil’s bottom line. Call it an “oil shock” but the per-barrel WTI crude oil price shooting from $67 to $92 during the past three months might only be the beginning.
The oil-price move has been so powerful that the last of the Exxon Mobil bears on Wall Street finally tapped out. Redburn analyst Peter Low recently retracted his “sell” rating on XOM stock, and currently the stock has no “sell” or equivalent ratings among prominent analysts.
Is XOM Stock Too Expensive to Own Now?
Due to Saudi Arabia’s and Russia’s extended oil production cuts and other factors, Exxon Mobil’s market capitalization has increased recently. Suffice it to say, the Exxon Mobil bulls definitely have momentum on their side.
There are no worries about value, though, as Exxon Mobil’s GAAP-measured trailing 12-month price-to-earnings (P/E) ratio of 9.3x isn’t outlandish by any means. For reference, the sector median P/E ratio is 8.85x.
The point is that XOM stock isn’t really expensive even if the share price has increased. Exxon Mobil has a decent earnings track record, and the macro environment favors continued growth for oil majors.
Hence, it shouldn’t be surprising if Exxon Mobil shares have gained significant value.
Besides, Exxon Mobil doesn’t seem to mind taking some of its oil-market windfall profits and distributing them to its loyal shareholders.
Exxon Mobil has a good track record of slowly but surely increasing its dividend payments, and currently, the company offers a forward annual dividend yield of 3.12%.
Who Should Consider XOM Stock?
Not everyone wants to participate in the oil market. However, if you’re amenable to investments with oil-and-gas exposure, then investigate Exxon Mobil.
A share stake in Exxon Mobil might not be right for every investor. However, XOM stock gets a “B” grade because it should appeal to some oil-price bulls, momentum watchers, value seekers and yield hunters.
On the date of publication, Louis Navellier had a long position in XOM. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.
The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
