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Here's Why Hold Strategy is Apt for ExxonMobil (XOM) Stock Now

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Exxon Mobil Corporation (XOM - Free Report) has witnessed upward earnings estimate revisions for 2022 in the past seven days. In the past year, the company, carrying a Zacks Rank #3 (Hold), has gained 57.5%, outpacing the 30.6% improvement of the composite stocks belonging to the industry.

What's Favoring the Stock?

The price of West Texas Intermediate crude has crossed the $75-per-barrel mark again. The positive trajectory in oil price is a boon for ExxonMobil’s upstream operations. Also, it has a pipeline of key projects in the Permian – the most prolific basin in the United States – and offshore Guyana. In the Permian, ExxonMobil has an inventory of more than 8,000 well locations, with the integrated energy major estimating a net of 10 billion oil-equivalent barrels of recoverable resource. In offshore Guyana, it made several discoveries that XOM estimated at more than 10 billion oil-equivalent barrels of recoverable resource.

Like upstream businesses, ExxonMobil also benefits from its strong refinery utilization. The firm has strong support for transitioning to a lower-emission future. XOM said that its recent new initiatives related to lower emissions comprised four large-scale carbon capture and storage opportunities.

Risks

The upstream business of the integrated firm is highly exposed to volatility in oil and gas prices. Also, the coronavirus pandemic and overspending on projects that couldn’t generate lucrative returns have made the balance sheet weaker.

Stocks to Consider

Better-ranked players in the energy space include Halliburton Company (HAL - Free Report) , MPLX LP (MPLX - Free Report) and DCP Midstream, LP . All the stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Halliburton is well known for providing products and services to energy companies.  Over the past seven days, HAL has witnessed upward earnings estimate revisions for 2022 and 2023, respectively. 

MPLX has ownership and operating interests in midstream energy infrastructure and logistics assets, thereby generating stable cashflows. With a strong focus on returning capital to unit holders, MPLX announced that as of third-quarter 2022-end, it had roughly $1 billion available under its unit repurchase authorizations.

DCP Midstream is a leading provider of midstream services, having a fully integrated and resilient business model. With 12 billion cubic feet of natural gas storage assets, the master limited partnership has 2.8 billion cubic feet of daily natural gas pipeline capacity. DCP Midstream strongly focuses on strengthening its balance sheet with the foremost priority of reducing debt load.


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