Buy Exxon Mobil Corporation (NYSE:XOM) Before the Start of 2018


Oil prices rose earlier this week amid reports of declining US crude inventories. The biggest oil exporter Saudi Arabia has also hinted to end the current oil glut by capping its production. Exxon Mobil Corporation (NYSE:XOM) is one of the biggest oil companies in the world. The company is expected to announce quarterly results by the end of this week. Exxon Mobil has an excellent Debt/Equity ratio (0.23) when compared to its industry peers. As of the end of the second quarter, Exxon’s debt is $37.9 billion. The stock has a dividend yield of 3.8%. The stock has strong fundamentals and growth catalysts. Exxon Mobil Corporation (NYSE:XOM) shares are down over 7% since the start of the year. We believe that the stock is poised for growth amid a recovery in the oil sector.

Analysts think that Exxon Mobil Corporation (NYSE:XOM) will rise because of the increasing oil demand in the world. According to an estimate by the International Energy Agency, oil demand is expected to grow by 1.5 million barrels per day. Earlier this year, the agency had forecasted a 1.3 million barrel per day increase in the demand.

Analysts believe Exxon Mobil will impress the Street with the third quarter results amid increasing profits in downstream and upstream divisions. Exxon Mobil’s margins in the refinery business are also increasing.

In the second quarter, Exxon Mobil upstream and chemicals division profits fell 35%. However, the damage was partially offset due to a 24.1% increase in downstream profits.

In September, Exxon Mobil Corporation (NYSE:XOM) said it was adding 22,000 net acres to its Permian Basin facility. Analysts think that the Permian basin has a lot of opportunities. Exxon is in a strong position to benefit from the facility amid its hydraulic fracturing and horizontal drilling capabilities. Exxon Mobil Corporation (NYSE:XOM) is slowly but consistently building new rigs and facilities in the Permian basin. The company has 19 drilling rigs in the basin.

Analysts also think that offshore field of Guyana is a growth catalyst for Exxon Mobil. The company’s management plans to start 120,000 acre facility in Guyana that will become operational in 2020.

Earlier this month, Barclays analyst Paul Cheng increased his price target for XOM to $94 from $91.

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