2) Exxon Mobil Corporation (NYSE:XOM)
Forward P/E Ratio as of 8 November: 13.5x
Number of Hedge Fund Holders: 92
Exxon Mobil Corporation (NYSE:XOM) is engaged in the exploration and production of crude oil and natural gas in the US and internationally.
Wall Street analysts are optimistic about Exxon Mobil Corporation (NYSE:XOM)’s recent acquisition of Pioneer Natural Resources. This has further expanded its footprint in the US shale oil sector, mainly in the Permian Basin. The successful merger supports its ability to execute large-scale acquisitions effectively and might significantly contribute to future earnings growth. Exxon Mobil Corporation (NYSE:XOM)’s strong emphasis on organic growth with the help of its existing asset base and new project startups highlights a balanced approach to expansion.
The company plans to leverage its competitive advantages in resource development and operational efficiency in a bid to drive long-term value creation. Through controlling every aspect of the value chain, starting from upstream activities (like oil and gas exploration and production) to downstream operations (such as refining and marketing), Exxon Mobil Corporation (NYSE:XOM) achieved significant cost efficiencies, which provides it with a competitive edge.
Exxon Mobil Corporation (NYSE:XOM)’s expertise in deepwater drilling, unconventional resources, and liquefied natural gas projects allows it to go for a wide range of high-potential developments. Analysts at Wolfe Research upped their target price from $137.00 to $138.00 on 31st October.
Madison Investments, an investment advisor, released its Q1 2024 investor letter. Here is what the fund said:
“This quarter we are highlighting Exxon Mobil Corporation (NYSE:XOM) as a relative yield example in the Energy sector. XOM is a leading integrated oil and natural gas company. It has upstream assets that develop and produce oil and natural gas, along with downstream refining and chemical manufacturing assets. We believe it has attractive low-cost acreage in the Permian basin and has a sizeable growth opportunity in Guyana. Further, we think XOM has a sustainable competitive advantage due to size and scale, and its ability to integrate refining and chemical assets provides a low-cost advantage versus competitors.
Our thesis on XOM is that it will grow production volumes of oil and gas moderately over the next few years, while limiting excessive capital investment that plagued the industry from 2014-2020. Production growth will come from its 2023 acquisition of Pioneer Natural Resources, which is the largest producer in the Permian basin. XOM plans to double its Permian output by 2027, to 2 million barrels per day. Capital spending will be limited to $20-25 billion per year through 2027, which should allow for significant amounts of cash to be returned to shareholders including a $35 billion share repurchase program and continued dividend increases. Higher oil prices would provide a tailwind to our thesis but are not necessary. We think XOM can grow earnings and cash flow if oil prices remain above $60 per barrel…” (Click here to read the full text)
