What Happened to Exxon Mobil?

What happened to Exxon Mobil ($XOM)? The oil giant used to dominate the market, but the stock has been a major laggard during this bull market. It’s not just the sector; XOM has lagged the XLE as well (see below).

big.chart10292013

Exxon is still a big kid. They have a market cap of $390 billion which is second only to Apple ($AAPL) in the S&P 500. But it’s not that far ahead of Google ($GOOG) which comes in at $340 billion. If XOM had merely kept pace with the S&P 500, their market cap would be over $700 billion today.

Is XOM a good buy here? That’s hard to say. The stock is probably lower than where it ought to be, but it’s not clear how much long-term potential there is. XOM is going for 11 times next year’s earnings, but those earnings are projected to be less than last year’s profit.

You can often find good buys by looking at what strong stocks have lagged the market for a few years. XOM certainly fits that. But I’m not convinced the stock is a bargain just yet.

Posted by on October 29th, 2013 at 10:16 am


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