Displaying items by tag: Exxon

(Houston)

Oil prices are at a fresh peak seemingly every day. Some who have been watching the space for years might be wondering if that will prove fleeting or if it is the start of a big bull market run. Goldman sees oil as staying between $75-80 per barrel over the next 18 months, which will help companies deleverage and improve their returns. OPEC seems likely to be supportive of current prices. Given all this, Goldman thinks oil stocks are a good idea, recommending Occidental, Exxon-Mobil, Devon, Hess, and Schlumberger, among others.

FINSUM: If you believe in the economic recovery then commodities seem likely to have a strong run, oil included.

(Houston)

Many investors may still be shy about buying oil companies. After all, oil had a major fallout jut a few years ago and many factors, like green energy, seem to be playing against the future of oil. Accordingly, most oil companies are playing into this logic by cutting back on spending and boosting sources of alternative energy, but not Exxon. The company is boosting R&D spending and trying to grow its gas and oil output counter to all its rivals. Its logic is that demand for gas and oil is forecasted to grow considerably until 2030 as the world’s middle class surges to 5 bn people (versus 3 bn today). One fund manager comments on Exxon that “We think Exxon’s investment opportunities are world-class and that the best time to invest is when everyone else is retrenching”.

FINSUM: Exxon is trying to keep doing what it does best—produce oil. It is interesting they are taking a different approach to the market, but that means they are probably going to have high beta. If you believe in the strategy, it is an interesting buy.

(New York)

One of the market’s big fears at the moment is rising rates. Inflation is rising and the Fed is poised to hike rates three times this year. With that in mind, Barron’s has chosen some stocks that will help defend your portfolio against jumping interest rates. Stock with good dividends tend to perform poorly in rising rate periods, but if you are looking for good-yielding stocks which will continue do well, look at commodity-related companies, whose free cash flow can maintain dividends. Exxon Mobil, Schlumberger, General Motors, and Kimberly-Clark all look set to do well.

FINSUM: So what sets these stocks apart is that their dividends look sustainable AND they have attractive valuations, both of which make them more likely to perform well.

(Houston)

So oil has staged a slow and cautious recovery over the last year powered largely by OPEC’s oil cuts. That said, prices are still ~35% below the $100 per barrel threshold. But guess what, it does not matter. In an absolutely eye-watering piece of data that is a testament to both management and technological innovation, Shell oil company is making as much profit barrel with oil at $60 as it did when oil was $100. Exxon performs even better.

FINSUM: Oil companies have done a truly commendable job rejigging their business models and cutting costs to maintain profitability.