4. Exxon Mobil Corp. (NYSE:XOM)
Forward Price-to-Earnings Ratio: 12.66
Market Cap as of September 26: $509.41 billion
Number of Hedge Fund Holders: 92
Exxon Mobil Corp. (NYSE:XOM) is a multinational oil and gas corporation and the largest direct descendant of John D. Rockefeller’s Standard Oil. It’s a major producer of crude oil and natural gas, and also operates in the downstream sector, refining crude oil and selling petroleum products, and in the chemical sector, producing petrochemicals.
This company is a popular energy stock due to its successful acquisitions. The company recently completed its acquisition of Pioneer Natural Resources, creating the world’s largest potential for high-return unconventional resource development. It also reached an agreement with Air Liquide to produce carbon-free hydrogen, with 98% of CO2 removed.
It also increased its share repurchase program to $20 billion through 2025, contingent on market conditions, and plans to repurchase over $19 billion by the end of 2024.
Exxon Mobil Corp. (NYSE:XOM) achieved record production in Guyana and the Permian Basin, with the latter reaching 1.2 million barrels per day. The second quarter of 2024 saw a 12.24% revenue growth as compared to the same quarter in 2023, generating $93.06 billion in total revenue. Its strong cash flow from oil and gas operations in various countries provides the financial flexibility needed to invest in these innovative projects.
Its expansion into LNG projects in Mozambique and the US aligns with the global shift towards cleaner energy sources. These initiatives demonstrate the company’s commitment to sustainability and position it for long-term growth in the evolving energy landscape. Its diversified portfolio and strategic initiatives position it well for growth in the evolving energy landscape, making it an attractive investment choice.
Madison Dividend Income Fund stated the following regarding Exxon Mobil Corporation (NYSE:XOM) in its first quarter 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)
