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Exxon Mobil: Good Choice for Conservative Investors

This recent issue of The Value Line Investment Survey® was dominated by energy-related stocks. More specifically, the Value Line Research Department has analyzed the equities that reside in the Petroleum (Integrated), Natural Gas (Diversified), Natural Gas Utility, Oil/Gas Distribution, and Pipeline MLP Industries. Of the stocks in those groups, they continue to suggest that investors take a look at high-quality Exxon Mobil (XOM) shares.

“Exxon is the world's largest publicly traded oil company, with daily production of more than two million barrels. The Texas-headquartered corporation employs more than 71,000 individuals and has a market capitalization that exceeds $320 billion. It has been a component of the Dow Jones Industrial Average since 1928 (then known as Standard Oil of New Jersey).

“We look for Exxon's profits to trend upward in 2018. The probability of higher average oil prices stands to be a plus for the pumping division. Moreover, demand for petroleum products, including gasoline and diesel fuel, should continue rising, to the benefit of refining and marketing operations. Meanwhile, the strength of the global economy augurs well for chemicals manufacturing volume. Add in a lower overall tax rate, and we estimate about a 15% rise in earnings per share this year. Further progress is likely in 2019, assuming global business conditions remain on the upswing.

Exxon Mobil shares, in our view, remain a good choice for income and three- to five-year total return potential. Their top quality makes them especially appealing for conservative investors.

Source: Value Line Market Focus, 551 Fifth Ave., FL 3, New York, NY 10176.

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