We recently compiled a list of the 12 Best Fortune 500 Stocks To Buy According to Hedge Funds. In this article, we are going to take a look at where Exxon Mobil Corporation (NYSE:XOM) stands against the other Fortune 500 stocks.
The Fortune 500 list includes companies that generate the highest revenue in the United States. In total, Fortune 500 companies represent two-thirds of the US GDP with $18.8 trillion in revenues, $1.7 trillion in profits, and $43 trillion in market value (as of March 28, 2024), and they employ approximately 31 million people worldwide. Large-cap stocks, which form most of the Fortune 500, are typically safer investments and offer relative stability in times of economic difficulty.
READ ALSO: 11 Best Performing Dow Stocks so Far in 2025
After registering significant gains over the last two years, the broader US market fell sharply on Friday in the wake of weaker-than-expected economic reports and softening consumer demand. A recent report by S&P Global showed that business activity in the US is slowing down, with growth decelerating to a 17-month low. The slowdown is primarily a reflection of rising uncertainty about the business environment, especially in relation to federal government policies regarding domestic spending cuts and the constant threat of looming tariffs.
There are also serious concerns of high inflation due to the said tariffs, causing consumers to be more wary of their spending habits. According to the Tax Foundation, if the tariffs threatened by President Trump are actually imposed, it would amount to an average tax increase of more than $800 per US household in 2025. The tariffs on China alone will add $172 to the tax burden per household, while the rumored imposts on Canadian oil will drive up the price of gas, affecting the entire economy.
That said, some policy measures promised by the Trump administration can also bode well for US corporations and the overall business environment, including taking a less heavy-handed approach towards mergers than under President Biden’s administration. Moreover, the cornerstone of Trump’s second term will be to relax tax policies and extend or make permanent many of the provisions of the 2017 Tax Cuts and Jobs Act that expire at the end of 2025. The President has campaigned on further reducing the base corporate rate to 20%, with an additional cut to 15% for companies that produce goods on American soil.
Another important thing to be mindful of was recently highlighted by Bank of America in a note earlier this month, warning investors of the high concentration levels in the market, where a handful of firms command the lion’s share of investments. This is partially because of passive investing, where investors shovel money into indexes indiscriminately. Passive funds now hold a higher percentage of the US stock market than active funds, which can distort market prices and severely mislead investors. To avoid a potential drawdown, the bank has advised its investors to diversify and consider investing in baskets of quality stocks with lower exposure to the Magnificent Seven stocks.
Methodology
To collect data for this article, we referred to the top 50 companies among the Fortune Global Rankings as of January 20, 2024. We then picked out 12 companies with the highest number of hedge fund investors according to the Insider Monkey database as of Q4 2024. Following are the Best Fortune 500 Stocks to Buy According to Hedge Funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Aerial view of a major oil rig in the middle of the sea, pumping crude oil.
Exxon Mobil Corporation (NYSE:XOM)
Number of Hedge Fund Holders: 104
Next on our list of the Best Large Cap Stocks According to Hedge Funds is Exxon Mobil Corporation (NYSE:XOM), one of the largest integrated fuels, lubricants, and chemical companies in the world. With operations in more than 60 countries around the globe, the oil major’s competitive edge stems from its diversified world-class asset portfolio.
Exxon Mobil Corporation (NYSE:XOM) is riding high after its US shale business is booming following the $59.5 billion acquisition of Pioneer Natural Resources last year. Its Guyana business is also paying off, helping it generate $34 billion in earnings and $55 billion in cash flow from operations in 2024 – its third-highest tally in the past decade despite weaker market conditions. Exxon’s strong financial position has allowed it to distribute more than $125 billion in dividends and buybacks in the last five years, $30 billion more than the closest competitor.
Exxon Mobil Corporation (NYSE:XOM) announced at the end of last year that its annual project spending will rise to between $28 billion and $33 billion between 2026 and 2030, with a goal of lifting its oil and gas output by 18%. As a result, the oil giant is expecting to deliver incremental growth potential of $20 billion in earnings and $30 billion in cash flow by the end of the decade, allowing it to keep its commitment to sustainable, competitive, and growing shareholder returns. XOM’s cost-reduction target was also increased to $18 billion by 2030, up from the earlier target of $15 billion by 2027.
Shares of Exxon Mobil Corporation (NYSE:XOM) were held by 104 hedge funds in the IM database at the end of Q4 2024, 18 more than the previous quarter. XOM has surged by over 89% over the last five years, against gains of approx. 83% by the broader market.
Overall XOM ranks 10th on our list of the best Fortune 500 stocks to buy according to hedge funds. While we acknowledge the potential for XOM as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than XOM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stock To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap
Disclosure: None. This article is originally published at Insider Monkey.
