Advertisement
Markets

ExxonMobil: Well-Oiled

Shares of this oil giant look promising for 2006, one analyst says.

Banc of America analyst Daniel Barcelo figures big oil companies ought to enjoy another good year in 2006, and he says shares of ExxonMobil (XOM) should be standout performers. He upgraded the stock on Wednesday to "buy" and lists it as one of his top picks for the coming year. (Amerada Hess is Barcelo's other favorite oil stock.)

Advertisement - Article continues below

Barcelo says oil prices should remain strong in 2006, although he doesn't think they'll soar to new highs as they did last year. Rather, he estimates prices will average around $55 a barrel. Crude traded at $63 a barrel on Wednesday.

But Barcelo points out that production growth among integrated oil companies should be "significantly stronger than what we have seen over the past five years." That should help keep up the sector's earnings momentum, he says, even without a big surge in oil prices.

He looks for Exxon, which has been seeking new production areas, to increase production 5% this year, one of the strongest growth rates in the sector. Plus, with its diversified business, Exxon is less leveraged to the price of oil than some of its peers are, which Barcelo says should benefit its shares should oil prices remain flat.

Exxon is widely admired for its financial strength and operational efficiency. Barcelo notes that the company leads the pack in returns on capital employed (ROCE) -- a key measurement for integrated oil and gas companies. Exxon rewards investors through its large share repurchase program and has raised its dividend more than 20 years in a row. The stock yields 2.0%.

Shares have fallen 11% from their 52-week high of $66, reached in September. At $59, they trade at 11 times the consensus 2006 earnings estimate of $5.47 per share, according to Thomson First Call.

--Lisa Dixon

Advertisement
Advertisement

Most Popular

7 Surprisingly Valuable Assets for a Happy Retirement
happy retirement

7 Surprisingly Valuable Assets for a Happy Retirement

If you want a long and fulfilling retirement, you need more than money. Here are the most valuable retirement assets to have (besides money), and how …
August 3, 2020
Turning 60 in 2020? Expect Lower Social Security Benefits
Coronavirus and Your Money

Turning 60 in 2020? Expect Lower Social Security Benefits

When you file for Social Security, the amount you receive may be lower.
July 30, 2020
How a Second Stimulus Check Could Differ from Your First One
Tax Breaks

How a Second Stimulus Check Could Differ from Your First One

The HEROES Act, which was passed by the House in May, would authorize a second round of stimulus checks. While the new payments would be similar to th…
July 22, 2020

Recommended

The Best and Worst Presidents (According to the Stock Market)
Markets

The Best and Worst Presidents (According to the Stock Market)

Mount Rushmore features massive 60-foot-tall busts of celebrated presidents George Washington, Thomas Jefferson, Abraham Lincoln and Theodore Roosevel…
August 4, 2020
Stock Market Winners, Losers and Lessons Learned
investing

Stock Market Winners, Losers and Lessons Learned

Kiplinger.com senior investing editor Kyle Woodley joins our Your Money's Worth podcast to discuss what we can learn about investing from the stock ma…
August 4, 2020
Stock Market Today 7/31/20: Big Tech Roars, Everyone Else Snores
Markets

Stock Market Today 7/31/20: Big Tech Roars, Everyone Else Snores

Blowout earnings from Apple (AAPL), Amazon.com (AMZN) and Facebook (FB) led another charge by the Nasdaq on Friday.
July 31, 2020
Stock Market Today 7/30/20: Stocks Grind Through a Deluge of News
Markets

Stock Market Today 7/30/20: Stocks Grind Through a Deluge of News

The U.S. suffers its worst GDP drop in history, jobless claims rise and a host of other headlines converged to send the market to mixed results Thursd…
July 30, 2020