Exxon Mobil And Enterprise Products: Our Best Anti-Inflation And Catalyst-Rich Oil Picks

Summary

  • Among the major oil players, we see Exxon Mobil and Enterprise Products as the premier choice in the integrated space and midstream space, respectively.
  • Our current inflation problem is largely a fuel cost problem, which is not a problem for either of them.
  • Both provide generous and safe dividend yields to fight inflation. Both are dividend champs.
  • And Enterprise was one of the few MLPs that did not cut dividends even at the worst of the pandemic (it actually increased its payout).
  • Both also enjoy several strong catalysts specific to their own operations, in addition to the industry-wide catalysts.
  • Looking for a portfolio of ideas like this one? Members of Envision Early Retirement get exclusive access to our model portfolio. Learn More »

Increasing oil price

bluebay2014

Thesis

Readers familiar with our writing know that we are in general bullish about the energy sector. In this article, I will elaborate on two particular oil stocks: Exxon Mobil (NYSE:XOM) and Enterprise Products Partners (NYSE:

table: inflation is still quite high and the Fed anticipates it to remain high

Source: Fed's meeting minutes release Sept 2022.

Chart: XOM and EPD dividend yields

Source: Seeking Alpha data.

Chart: XOM shares outstanding

Source: Seeking Alpha data.

Chart: imported crude oil prices

Source: U.S. Energy Information Administration (EIA)

Chart: weekly US ending stocks of crude oil in SPR

Source: U.S. Energy Information Administration (EIA)

Chart: US net imports of crude and liquid fuels

Source: U.S. Energy Information Administration (EIA)

Chart: XOM generated a $19.9B operation case in the past quarter, not only at the peak level in a decade but also more than 2x higher than its average of $8.9B.

Source: Seeking Alpha data

Chart: natural gas prices now stand at $7.88 per million Btu.

Source: U.S. Energy Information Administration (EIA)

Chart: EPD cash from operations also stand at a record level

Source: Seeking Alpha data

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This article was written by

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** Disclosure: I am associated with Sensor Unlimited.

** Master of Science, 2004, Stanford University, Stanford, CA 

Department of Management Science and Engineering, with concentration in quantitative investment 

** PhD,  2006, Stanford University, Stanford, CA 

Department of Mechanical Engineering, with concentration in  advanced and renewable energy solutions

** 15 years of investment management experiences 

Since 2006, have been actively analyzing stocks and the overall market, managing various portfolios and accounts and providing investment counseling to many relatives and friends.

** Diverse background and holistic approach 

Combined with Sensor Unlimited, we provide more than 3 decades of hands-on experience in high-tech R&D and consulting, housing market, credit market, and actual portfolio management. We monitor several asset classes for tactical opportunities. Examples include less-covered stocks ideas (such as our past holdings like CRUS and FL), the credit and REIT market, short-term and long-term bond trade opportunities, and gold-silver trade opportunities. 

I also take a holistic view and watch out on aspects (both dangers and opportunities) often neglected – such as tax considerations (always a large chunk of return), fitness with the rest of holdings (no holding is good or bad until it is examined under the context of what we already hold), and allocation across asset classes.

Above all, like many SA readers and writers, I am a curious investor – I look forward to constantly learn, re-learn, and de-learn with this wonderful community.

Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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