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Here's Why Hold Strategy is Apt for ExxonMobil (XOM) Now
Exxon Mobil Corporation (XOM - Free Report) is a leading integrated energy player. In the past year, ExxonMobil, carrying a Zacks Rank #3 (Hold), has gained 28.7%, outpacing the 7.8% rise of the composite stocks belonging to the industry.
What's Favoring the Stock?
The price of West Texas Intermediate crude is again currently approaching the $70-per-barrel mark. 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 resources. 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 solid support for transitioning to a lower-emission future. XOM said that its new initiatives related to lower emissions comprised four large-scale carbon capture and storage opportunities.
The upstream business of the integrated firm is highly exposed to volatility in oil and gas prices. Also, ExxonMobil is offering a lower dividend yield than the composite stocks belonging to the industry.
Stocks to Consider
Better-ranked players in the energy space include Murphy USA Inc. (MUSA - Free Report) , Sunoco LP (SUN - Free Report) and Antero Midstream Corporation (AM - Free Report) . While Murphy USA and Antero Midstream carry a Zacks Rank #2 (Buy), Sunoco sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Murphy USA is a well-known name as a prime retailer of gasoline and convenience merchandise. MUSA, having more than 1,700 stores, has witnessed upward earnings estimate revisions in the past 60 days for 2023 earnings.
Sunoco has a stable business model while transporting motor fuel to roughly 10,000 convenience stores. In the past 30 days, Sunoco has witnessed upward earnings estimate revisions for 2023.
Antero Midstream generates stable cashflows, banking on its midstream assets involved in gathering, compression, processing and fractionation activities. The properties are centered around the prolific Appalachian Basin. Over the past 30 days, Antero Midstream has witnessed upward earnings estimate revisions for 2023.