- Oil stocks tend to fluctuate very little year in and year out. Right now, they're on their way up.
- ExxonMobil has been climbing all year and Exxon stock (XOM) is a "moderate buy."
- XOM seems comparatively stronger than most of the others in the same industry.
Oil stocks are generally a smart investment, particularly because black gold continues to dominate the energy market. Oil stocks tend to fluctuate very little year in and year out. Right now, they're on their way up, which means it could be a good time to buy.
Is an Oil Boom Upon Us?
Analysts have determined that oil stocks are a buy right now, especially ExxonMobil Corporation (NYSE: XOM), which was bursting through the top of its 52-week range ($57.96 to $106.40) at the beginning of the week to close out the month of October. Analysts offering 12-month forecasts on ExxonMobil stock have established a median price target of $105.30. This is near the median of the estimate range ($83.00 to $133).
The stock's most recent low was on December 20, 2021, which was actually part of a somewhat steady (albeit low) run for most of that year. Last year, the stock opened only slightly higher ($58.79) than it closed. Since that December low, XOM has been on a dramatic climb. The stock did dip down across some days and weeks but oil and fuel tends to fluctuate seasonally. ExxonMobil has consistently corrected higher compared to its previous report and is on track to continue this trend.
Exxon Has Been on a Tear for the Past Year
Exxon has a current $3.80 EPS on $104.6 billion in sales and continues to rally from its recent low at the end of September. As the next reporting date approaches (October 28), Exxon not only soars over much of it competitors, but it has also outperforms the energy sector by more than double over the last year.
The earnings failed to beat the estimate in only one quarter of the past year: Q1 of 2022. The two prior quarters celebrated solid earnings beats. In fact, in the most recent quarter (Q2 of 2022), earnings beat the range by a few cents. This most recent earnings boost comes after four consecutive escalating sales quarters. Sales growth was steady in the latter half of last year but made a big jump at the start of the year. In both Q1 and Q2 2022, actual sales beat the estimate.
Exxon Excels in a Competitive Market at a Delicate Time
Other petroleum and oil excavation/refinement firms may also do well this year but not nearly to the extent of XOM, which is up on average 68.93% since the same time last year. Equinor ASA (NYSE: EQNR) has also seen similar fluctuation but is only up 24.14% since last year. Further down the line is TotalEnergies SE (NYSE: TTE), which may be up more than 6% over the past nine months but only 1.18% up since the same time last year.
TotalEnergies' fluctuation has been far more stable, which is why its current trajectory is less notable than ExxonMobil. TTE's 52-week range is only a few points apart (just shy of $45 in September 2022 to north of $61 in early June a few months prior). Equinor ASA had a similar 52-week range but an upside of nearly 700% could hold immense promise in the future. By comparison, TotalEnergies has a current upside forecast of 15.81%, while XOM may have a downside. Analysts recommend a "hold" on both TTE and EQNR.
Chevron (NYSE: CVX) is another energy company with a forecast downside (-1.95%) but has received a "buy" rating like XOM. Much like XOM, CVX has managed to grow more than 52% up from this period last year. It is also similar to Exxon because it is currently valued ($173.30) near the top of its 52-week range ($110.73 to $182.40). CVX currently carries the highest EPS as well at $14.99 (about 30% higher than XOM).
Of the four stocks mentioned, CVX also has the highest beta value, making it the most volatile. It also has the lowest return on equity (ROE), but it's not far behind XOM. XOM and CVX share share the highest return on assets (ROA) by only about a half a percent.
Analysts tend to favor Exxon at least 2:1 on average among the four competitors, one of the main reasons analysts have given XOM a "moderate buy."
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