Exxon Mobil (NYSE:XOM) stock is great again. Over the last year, it has outperformed even Apple (NASDAQ:AAPL). It opened Jan. 21 at $73.13/share, up 48% over the last trading year, bringing the market cap to $306 billion.
Despite this, it’s relatively cheap. The dividend still yields 4.8%. If it hits the average analyst estimate for net income this year, , the forward price to earnings ratio is under 12. The shares have been especially hot since 2022 started, up 19.5%.
The stock price is driven by the oil price, now almost , the standard U.S. grade. Despite losing a proxy vote on directors last year to activists , the company is back to
Winning Two Ways
Exxon Mobil is winning on both the production side, called the upstream by oilmen, and the refining side, which oilmen call the downstream business.
The company’s exploration performance off Guyana is Some 10 billion barrels of reserves have been discovered. Its production there is expected to double in two years, to 220,000 barrels per day, then double again the next year.
The company’s to pay $6.6 billion for leases in Texas’ Permian Basin is looking like the bargain of the century. Production in the Permian continues to break records. It should this month.
Downstream, Exxon Mobil is getting from the U.S. petroleum reserve. Crack spreads, which define the profit it can expect from refining,
Is This the Top?
Tipranks lists 14 analysts following Exxon Mobil stock. One bull even has a price target of $100/share. Bulls say that if Exxon Mobil “can outlast environmentalists,”
That’s not how management claims to see it. CEO Darren Woods . Burned by the last decade’s oil bust, which reversed an early decade boom, Exxon Mobil is selling U.S. assets,
Like a wealthy adult raised during the Great Depression, Exxon Mobil is also pinching pennies. It’s locking out workers for
and will soon shut a 550,000 barrel/day refinery in Baytown . The squeeze will , now expected to reach . Those numbers are due Feb. 1.
Short Term, Long Term
XOM stock is benefitting from short-term trends. American bankers, burned by the oil bust, still aren’t lending to the industry. American shale no longer has the “whip hand” in determining oil prices. Saudi Arabia and Russia have it.
The long-term trends look more sinister. Electric car companies remain hot, and production is ramping up, from 3.5 million in 2020 to an expected States are . “The campaign to ban gas stoves is .”
The Bottom Line
XOM stock is a cigarette stock. Like Altria (NYSE:MO) and Philip Morris (NYSE:PM), it’s something you buy for the dividend. The stock’s 2021 rise was a pleasant surprise for investors, but that’s not why they’re in it.
No one believes cigarettes don’t cause cancer anymore. No one, , pretends climate change isn’t real.
Exxon Mobil may be just paying lip service to , but the planet can’t afford to wait. Extreme weather, caused by climate change, cost . That toll will rise with time.
The plan is for Exxon Mobil to slowly liquidate, and hope shareholders can keep the profit.
On the date of publication, Dana Blankenhorn held a long position in AAPL. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
has been a financial and technology journalist since 1978. He is the author of , available at the Amazon Kindle store. Write him at , tweet him at , or subscribe to his Substack .
