Exxon Mobil (XOM)
Exxon Mobil (XOM) is a MAJOR player in crude oil and natural gas. They’re into exploration, production, 
transportation, and more. With a market cap of over 400 billion as I write this, they are a true “gorilla in the rooom” in terms of oil and gas. Exxon’s made so much money for so many people that I feel like I have to add it to my blog.
Which is kind of funny. As I write this, Yahoo shows their earnings as $9.34 a share, but their dividend is only $1.60, for a current yield of 2%.
Exxon is fascinating to me though, for what they have and haven’t done in recent years. As oil prices and profits surged to record levels, many of their competitors spent vast amounts of money on exploration and the outright purchase of previously discovered reserves. Exxon took a different approach. Sure, they spent some money, but they also decided that prices were at unsustainable. In other words, they bet that prices would drop.
That may not seem like rocket science now, but at the time it was bold thinking. It made a lot of sense for another reason, too. Most major oil and gas companies were not able to find reserves in sufficient quanitities to justify the cost of exploration.
THAT points to one major concern I have for Exxon though. If your business is selling oil and gas, and you can’t find more at an economically sensible price, you’ve got a problem.
If that weren’t enough of a problem, consider this from Yahoo finance: “The company operates in the United States, Canada, Europe, Africa, Asia-Pacific, the Middle East, Russia/Caspian region, and South America.” You read the news as much as I do. How many of these countries have–or inevitably will–nationalize reserves.
Who knows? Maybe these factors are already priced into the stock, but I’d try to profit in this general area with something related–maybe an oil and gas services etf such as Oil Services Holders (OIH). (Actually I own Fidelity select Energy Services (FSESX), because it’s included in my plan at work.)
For another opinion on Exxon, click here.