Send me real-time posts from this site at my email
Motley Fool

Why ExxonMobil Stock Is Rallying Today

What happened

Shares of ExxonMobil (NYSE: XOM) jumped as much as 5.5% by 3 p.m. EST on Thursday. Fueling the oil stock were higher oil prices and increasing bullishness among Wall Street analysts.

So what

Oil prices continued their recent rally today. WTI, the U.S. oil price benchmark, was up more than 1% to $54.50 a barrel, while Brent, the global oil benchmark, rose about 0.5% to more than $56 a barrel. That continued crude oil's recent climb as WTI is now up more than 10% in 2021 and at its highest level since last February. Those higher oil prices are great news for Exxon and should enable the oil giant to generate more cash this year.

Image source: Getty Images.

The recent uptick in the oil market is making analysts increasingly bullish on the stock. Yesterday, J.P. Morgan upgraded Exxon for the first time in seven years, changing its rating from neutral to overweight, and saying that "execution might finally be turning the corner." Add in higher oil prices, and its nearly 7%-yielding dividend is looking increasingly secure.

Barclays followed that up today by upgrading Exxon from equal weight to overweight. Fueling that bullish view is a better oil price outlook and lower costs, which could enable the company to significantly improve its financial metrics this year.

Now what

Exxon needs higher oil prices to generate enough cash to support its dividend and capital spending program. It's finally getting them thanks to the recent rally in the oil market, due in large part to Saudi Arabia. If oil continues moving higher, Exxon's stock should follow. However, given its reliance on crude, it could give back its recent gains if oil prices take a breather. Because of that, investors need to buckle up for what could be a bumpy ride.

10 stocks we like better than ExxonMobil
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and ExxonMobil wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks

*Stock Advisor returns as of November 20, 2020

Matthew DiLallo has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.


Source

Popular posts

Welcome! Is it your First time here?

What are you looking for? Select your points of interest to improve your first-time experience:

Apply & Continue