We recently published a list of Jim Cramer Stock Portfolio for Q4: Top 11 Stocks to Buy and Sell. Since Exxon Mobil Corp (NYSE:XOM) ranks 2nd on the list, it deserves a deeper look.
Jim Cramer in a latest program on CNBC talked about the importance of using short-term rallies to your advantage. He said that investors should know when to take the chips off the table.
“The idea that you should buy and hold through both the best of times and worst of times is probably incredibly foolish, with only very few exceptions,” Cramer said.
Cramer said that if the stock you bought is going higher and higher and you keep resisting the urge to take some profits, you won’t make any actual money from these gains if the stock comes down later paring all these profits. This seems straightforward but the idea of buying low and selling high is easier said than done, Cramer said.
“Don’t get carried away by the optimism. Instead, keep your head on straight, check your emotions, focus on long term and think about ringing the register, especially on stocks that might be getting too high,” Cramer added.
For this article we watched several latest programs of Jim Cramer aired on CNBC and picked 10 stocks he’s talking about. We also picked an interesting prediction Cramer made back in 2021 about a stock and saw how it turned out. With each company we have mentioned the number of hedge fund investors. 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 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Exxon Mobil Corp (NYSE:XOM)
Number of Hedge Fund Investors: 92
When asked about Exxon Mobil Corp (NYSE:XOM), Cramer said the stock is “expensive” when compared to Devon Energy.
“This is not the moment to own oil. It is finally cratering. Because the demand was never there I don’t understand why it was up so much.”
While Exxon Mobil Corp (NYSE:XOM) is investing in other forms of energy, the company still has a long runway in the traditional oil business.
According to Goldman Sachs, oil demand won’t peak until 2034, even with the push for electric vehicles and green energy. Goldman forecasts peak oil demand at 110 million barrels per day by 2034, potentially rising to 113 million barrels by 2040 if EV adoption is slower.
In Q2 2024, Exxon Mobil Corp (NYSE:XOM) posted adjusted net profits of $9.24 billion, or $2.14 per share, up from $7.88 billion, or $1.94 per share, a year earlier. The 10.3% increase in diluted EPS was driven by higher commodity prices and increased production following its acquisition of Pioneer Natural Resources in May. Revenue surpassed $93 billion, beating consensus estimates.
Exxon continues to manage its debt effectively, lowering its debt-to-market-cap ratio to 13.5% from 16.7%. The company’s debt-to-equity ratio remains well below that of its peers, while its liquidity ratios significantly exceed the industry median.
Recent acquisitions and expansion into areas like carbon capture, hydrogen, and renewable fuels should keep the company stable, even if oil prices slump. At the Barclays Energy-Power Conference, Exxon Mobil Corp (NYSE:XOM) CEO emphasized the company’s focus on decarbonization, including the Baytown hydrogen project, which is set to be the world’s largest low-carbon hydrogen facility by 2029.
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)
Overall, Exxon Mobil Corp (NYSE:XOM) ranks 2nd on Insider Monkey’s list titled Jim Cramer Stock Portfolio for Q4: Top 11 Stocks to Buy and Sell. While we acknowledge the potential of Exxon Mobil Corp (NYSE:XOM), our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. 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.
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Disclosure: None. This article is originally published at Insider Monkey.