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Here's Why ExxonMobil (XOM) is an Attractive Investment Bet Now
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Exxon Mobil Corporation (XOM - Free Report) has witnessed upward earnings estimate revisions for 2021 and 2022 in the past seven days. Also, this leading integrated company’s stock price has surged 34% year to date compared with the industry’s rally of 18.1%. Currently, the stock sports a Zacks Rank #1 (Strong Buy).
Factors Favoring the Stock
The price of West Texas Intermediate crude, trading close to $60 per barrel mark, has improved significantly from the negative territory touched in April 2020. The momentum is likely to continue since the coronavirus vaccine rollout will possibly help the economy recover strongly this year, thereby aiding fuel demand.
The rally in oil price has also been supported by OPEC+ (OPEC and its non-OPEC partners) since the cartel and its allies have extended production cut till April. Per the agreement reached on Mar 4, following a meeting between OPEC led by Saudi Arabia and Russia-led non-OPEC producers, majority of OPEC+ members decided to keep the output unchanged.
Overall, the massive improvement in oil price is definitely a boon for ExxonMobil’s upstream operations. The company now plans to allocate 90% of its spending for adding resources in prolific oil and gas plays in Guyana, Brazil and the United States. Importantly, the company anticipates its investment to generate more than 30% return.
While funding profitable projects, ExxonMobil is also planning to lower its debt load. The plans outlined by the company also include that through 2025 it will boost its earnings and cashflows, which will help to preserve and increase shareholder’s dividend.
The integrated firm is also focusing strongly on lowering costs. In 2020, the company successfully reduced its cash operating expenses by 15%. In fact, by 2023-end, the company projects annual structural savings of $6 billion, as compared to 2019.
Overall, in order to win investors’ favor, the company is now not focusing aggressively on oil and gas productions. Instead, it is putting prime emphasis on preserving capital for shareholders and also to lower costs. Another energy giant that has also decided to keep capital outlays in check, while preserving returns for stockholders is Chevron Corporation (CVX - Free Report) . Notably, following poor returns from the energy sector over a long term, investors now prefer companies that are showing discipline regarding spending capital.
Diamondback is likely to see earnings growth of 112.5% in 2021.
Matador is likely to see earnings growth of 300% in 2021.
Time to Invest in Legal Marijuana
If you’re looking for big gains, there couldn’t be a better time to get in on a young industry primed to skyrocket from $17.7 billion back in 2019 to an expected $73.6 billion by 2027.
After a clean sweep of 6 election referendums in 5 states, pot is now legal in 36 states plus D.C. Federal legalization is expected soon and that could be a still greater bonanza for investors. Even before the latest wave of legalization, Zacks Investment Research has recommended pot stocks that have shot up as high as +285.9%
You’re invited to check out Zacks’ Marijuana Moneymakers: An Investor’s Guide. It features a timely Watch List of pot stocks and ETFs with exceptional growth potential.
Image: Bigstock
Here's Why ExxonMobil (XOM) is an Attractive Investment Bet Now
Exxon Mobil Corporation (XOM - Free Report) has witnessed upward earnings estimate revisions for 2021 and 2022 in the past seven days. Also, this leading integrated company’s stock price has surged 34% year to date compared with the industry’s rally of 18.1%. Currently, the stock sports a Zacks Rank #1 (Strong Buy).
Factors Favoring the Stock
The price of West Texas Intermediate crude, trading close to $60 per barrel mark, has improved significantly from the negative territory touched in April 2020. The momentum is likely to continue since the coronavirus vaccine rollout will possibly help the economy recover strongly this year, thereby aiding fuel demand.
The rally in oil price has also been supported by OPEC+ (OPEC and its non-OPEC partners) since the cartel and its allies have extended production cut till April. Per the agreement reached on Mar 4, following a meeting between OPEC led by Saudi Arabia and Russia-led non-OPEC producers, majority of OPEC+ members decided to keep the output unchanged.
Overall, the massive improvement in oil price is definitely a boon for ExxonMobil’s upstream operations. The company now plans to allocate 90% of its spending for adding resources in prolific oil and gas plays in Guyana, Brazil and the United States. Importantly, the company anticipates its investment to generate more than 30% return.
While funding profitable projects, ExxonMobil is also planning to lower its debt load. The plans outlined by the company also include that through 2025 it will boost its earnings and cashflows, which will help to preserve and increase shareholder’s dividend.
The integrated firm is also focusing strongly on lowering costs. In 2020, the company successfully reduced its cash operating expenses by 15%. In fact, by 2023-end, the company projects annual structural savings of $6 billion, as compared to 2019.
Overall, in order to win investors’ favor, the company is now not focusing aggressively on oil and gas productions. Instead, it is putting prime emphasis on preserving capital for shareholders and also to lower costs. Another energy giant that has also decided to keep capital outlays in check, while preserving returns for stockholders is Chevron Corporation (CVX - Free Report) . Notably, following poor returns from the energy sector over a long term, investors now prefer companies that are showing discipline regarding spending capital.
Other Stocks to Consider
Other prospective players in the energy space include Diamondback Energy, Inc. (FANG - Free Report) and Matador Resources Company (MTDR - Free Report) . Both the stocks sport a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Diamondback is likely to see earnings growth of 112.5% in 2021.
Matador is likely to see earnings growth of 300% in 2021.
Time to Invest in Legal Marijuana
If you’re looking for big gains, there couldn’t be a better time to get in on a young industry primed to skyrocket from $17.7 billion back in 2019 to an expected $73.6 billion by 2027.
After a clean sweep of 6 election referendums in 5 states, pot is now legal in 36 states plus D.C. Federal legalization is expected soon and that could be a still greater bonanza for investors. Even before the latest wave of legalization, Zacks Investment Research has recommended pot stocks that have shot up as high as +285.9%
You’re invited to check out Zacks’ Marijuana Moneymakers: An Investor’s Guide. It features a timely Watch List of pot stocks and ETFs with exceptional growth potential.
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