10 Most Promising Energy Stocks According to Hedge Funds

2. Exxon Mobil Corporation (NYSE:XOM)

Number of Hedge Fund Holders: 92

Exxon Mobil Corporation (NYSE:XOM), headquartered in Houston, Texas, is a multinational energy giant with a diversified portfolio of assets spanning the oil and gas industry. The company’s upstream business covers exploration and production activities, while its downstream operations include refining and the manufacturing of chemicals and specialty products. The company ranks highly among the list of most promising energy stocks according to hedge funds.

Exxon Mobil Corporation’s (NYSE:XOM) upstream segment remains its primary profit driver, accounting for more than 70% of the earnings in Q2 2024. To strengthen this segment, Exxon Mobil Corporation (NYSE:XOM) acquired Pioneer Natural Resources for nearly $60 billion in November 2023. This acquisition is expected to increase its momentum in the Permian Basin, potentially doubling output to 2 million barrels per day (Moebd) by 2027.

With these strategic moves, the company is well-positioned for future growth and has earned an average rating of “Moderate Buy” from analysts.

Here’s what Madison Dividend Income Fund said about Exxon Mobil Corporation (NYSE:XOM) in its Q1 2024 investor letter:

“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)