Has Exxon Topped?

It appears that Exxon (XOM) has put in a structural top and may have seen the highs it will see for many years.

What does it say about the price of oil when the multi-year bull market in the stock of the world's largest energy company may be over?

We may have seen the highs in the oil price.  Commodity stocks often presage the movements in the underlying commodity. I think there is a fairly good chance WTI will fall to $100-$110, then bounce to retest the highs.  At that point, I will consider aggressively shorting oil.

Disclosure: None

Comments

[barcswine:]

Perhaps. BUT given XOM's aggressive exploration budget at present with tons of CASH still left over in their kitty, and XOM now sniffing at DEVON as a takeover target, long term defined as the next 5 to 8 years, these old AAA country boys at XOM will see new highs in the years to come regardless of the price of oil. For conservative long term holders, not traders, XOM will prosper. I can foresee it at $140 a share by
2015 at the latest.

2008 Aug 07 06:12 AM

[lucky lenny:]

going thru Exxon-Mobil’s 2007 Annual Report:

• From ’03 to ’07 - # of shs o/s diluted went down from 6.7 bill to 5.6 bill; net inc per diluted share rose from $3.23 to $7.28

• Exxon makes money regardless of the price of oil. For instance, they sell lots of plastics & resins, if the price of oil falls, Exxon’s cost of goods sold goes down & their profit margins in these areas go up.

• In summary, given Exxon’s tremendous earnings & reduced share count, it seems to many that the stock price can easily exceed $100 share. Especially since Exxon is buying back about 1.4 million shares of stock every day. XOM closed at $78.33.

2008 Aug 07 07:06 AM

[c300man:]

I've followed XOM closely for 30 years and my hunch is they will continue to be a very good long term investment.

They are in a great business, the leaders in their field, well-disciplined in all areas of their operations, have outstanding management, and treat their shareholders very well. What more could an investor want?

I haven't checked recently and it may be down a little with the recent share price dip, but since 1978 Exxon has returned over 15% per year including dividends and share price gain.

2008 Aug 07 07:33 AM

[Michael Fit...:]

Please read my recent articles on oil fundamentals:

seekingalpha.com/artic...

How does one conclude that Exxon has hit its all-time peak when the fundamentals for oil are so strong, and Exxon produces 4 million barrels a day? Exxon will be a strong performer for years to come. My only beef with Exxon is their skimpy non-competitive dividend, which is lowest in class despite the best financial sheet in the business and net profits that are simply astounding. Their management should get dinged big-time on their dividend policy. That said, you will see Exxon over $100/share within the next 12 months...along with COP and CVX. The fundamentals are just too strong, especially the fact that America is still in "oil-denial" and hasn't adopted a sane, comprehensive, long-term energy policy. As long at the world's largest consumer ignores the realities of worldwide oil supply/demand, oil will continue to move higher in the coming year. Spectacularly higher I fear.

2008 Aug 07 08:51 AM

[kurt walter:]

I am not worried about XOM, yet. I will get worried when the Marxist Obama and others like Maxine Waters want to decide how much money XOM can make. That is the time to get worried.

2008 Aug 07 01:03 PM

[Ashevillain:]

With a PE ratio well under 10, there is an implied yield of over 10% on the stock. You get your money back in 7 years at that rate. Thus, to maintain the current PE, assuming the same earnings XOM has right now, the stock has to double in 7 years. That's the minimum.

2008 Aug 07 01:50 PM

[ignorant:]

I agree that XOM's dividend payout should be increased to a competitive level with the other majors. The decline in production ( 8% last quarter) is killing the stock. Investors will pay a premium for energy companies that increase production and reserves. The stock will only recover if XOM is able to start increasing production and reserrves. Buying back stock does nothing to make the exploration business a success.

2008 Aug 07 02:08 PM

[Lazy Al:]

It’s become increasing difficult to correlate the price movements in the shares of the oil companies with that of the underlying commodity. For example, Exxon’s share price was higher when crude oil was $30 a barrel lower.

2008 Aug 07 02:49 PM

[Stockminder:]

What a bunch of crap. Look at more than just the last few years to see that Exxon tops regularly and then resumes it ascent. Sometimes it literally takes years. Exxon is the best stock in the world. Look at the whole chart!

2008 Aug 07 04:45 PM

[Mary08:]

"...We may have seen the highs in the oil price...."

Really?

We need to take a look at what the rest of the world is doing. India came out with an affordable car for their middle class. Do you really think the Chinese will stop buying Buicks ? (the oldest brand of American car) Bouncing is a good thought. We will get used to higher gas prices in increments, that's the plan.

2008 Aug 07 05:50 PM

[jjason:]

If you want to see lower gasoline prices Go To:

www.stopoilspeculation.../

And sign the petition.

I did because I am tired of being cheated by OPEC, Big Oil and speculators.

2008 Aug 08 08:29 AM

[0racle:]

If you really believe that XOM has topped, be a player and short it. Hell, it might actually fall to 75 before reversing and going to 90 in the next couple months...

2008 Aug 09 08:13 PM

[DaveinHacke...:]

XOM's reserves grew by 1% in '07, if memory serves, despite the expropriation by Chavez. I wouldn't get too concerned about a quarterly decline in production. The company is investing -- prudently -- in growing reserves and increasing production, and it has plenty of cash to do so. XOM at these prices probably has about 5% downside versus about 20%-25% upside over the next 12 months. It remains one of the best-run companies in the world. Its E&P business can benefit from an increase in oil prices, and its plastics and refining business can make money when oil goes down.

2008 Aug 09 08:51 PM

[WEBISKING:]

Buffett will tell you that buying back stock ACCOMPLISHS more for investors than raising the dividend does. A stock with a 7 PE ROE of 30% and has the cash flow to bu back a million shares a day should rally not worry

2008 Sep 06 05:31 AM

[JOE.D:]

XOM has been a great stock for me back to 1998. I only have a
minimum investment now and considering whether to buy more.

2008 Sep 13 09:30 AM