1. Exxon Mobil Corporation (NYSE:XOM)
Number of Hedge Fund Holders: 81
Along with its traditional energy operations of crude oil and natural gas, Exxon Mobil Corporation (NYSE:XOM) is also striding towards the hydrogen segment by engaging itself in hydrogen production, carbon capture, and lower-emission solutions.
Reported in July 2024, Jim Cramer included Exxon in the top companies expected to make it to the $1 trillion mark, on the back of its impressive consistent operational performance; Jim expects that to happen in the next two years, given that the oil prices jump at the same time, which the analysts are finding hard to predict.
The company has continued to perform well in Q1 2024 as it was seen recording an increase of $10 billion in free cash flow that exceeded analysts’ expectations by 21%, taking the total balance to $33 billion! Whereas the operating cash flow equaled $14.7 billion in the quarter. This was a result of $94 billion worth of capital expenditure in the past five years giving out returns to shareholders in the form of increased free cash flows in the quarter. The company continues to allocate capital towards exploration expenditures as it set aside an amount of $5.8 billion in the quarter for the said purpose.
The stock acts as a haven for investors as it not only paid back $6.8 billion worth of returns through dividends and share repurchase, but it also keeps its debt level at $40 billion which is quite healthy with respect to its free cash flow balance of $33 billion. Given the robust cash position and strong operational performances in the past some time now, the stock is an attractive one given its priced quite attractively as well at $12.52. More so, the company has been paying dividends for the past 142 years, with the quarterly dividend being $0.95 per share, yielding 3.3%.
In addition to this, the company finalized a project framework agreement with JERA, a Japanese power generation company, to explore ventures of low-carbon hydrogen and ammonia production in the U.S. Moreover, the two would now work together over the low-carbon hydrogen production plant in Baytown Complex, which Exxon is currently developing; this plant is expected to give out an annual production of 900,000 tons of low-carbon hydrogen and one million tons of low-carbon ammonia.
As such, the stock is expected to keep going on its upward trajectory (rose 14% on a YTD basis) as the analysts expect it to grow 17% in the next twelve months. Moreover, 81 hedge fund investors have held on to the stock, with the total investment being $5.5 billion. This comes on the back of the company’s earning guidance till 2027 according to which the company’s earnings potential is expected to increase by $10 billion till 2027, which is an annual growth rate of 10%. The company aims to do this through its projected cost savings, worth $15 billion, and its constant pricing and margins. Thus, the stock is well placed in our list of 10 Best Hydrogen and Fuel Cell Stocks to Buy.
While we acknowledge the potential of Exxon Mobil Corporation as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than Exxon Mobil Corporation but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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