Five Top Stocks For The Long-Term: Stock #4

Exxon Mobile Corp. (XOM) is stock #4 of this five part series. Yeah, yeah, I know, everyone hates the oil companies. I say, “If you can’t be ‘em, join ‘em!”. Also, even with demand having slowed considerably, the company continues to set new quarterly net profit records each and every quarter. When the price of oil is low, the company still makes a ton of money and when the price is high, the company still makes tons of money. Even better, when the price of oil drops, the average idiot investor sells his XOM lot, for fear of the stock nose diving. Bitch Please!! The stock has dropped nearly 30% since its high of $96 during last summer. Revenue and earning for XOM are down about 30% each, but management has still been able to have the ROA and ROE return 20% and 39% respectively.

Another huge reason to love this company besides the fact the stock is trading far below it’s 52 week high is that it has about 3.5 times the amount of cash in its holdings as it does total debt. Also, the price to sales ratio is under 1, which is another indication that this stock trading at just shy of $70 is priced right to buy. The current dividend yield on this stock is about 2% and with all that cash in its holdings, the company can easily raise that dividend every year in the foreseeable future.

Since the dollar appears to be heading for a downward spiral in the short-term, the price of oil should start to creep up, which again will help XOM gain more folks buying the stock. Be smart and start building your position before the late arrivers being to buy up the stock when oil starts to surge up.

Remember to buy incrementally and not go all in. This is not No-Limit Texas Hold-Em. The movement of this stock is directly affected by the price of oil. It may move more or less relative to the movement of oil, but the relationship between the two is direct. Even though oil is low right now, it will most likely move up in the future, however, it could fall even further down into the low 30’s or even the high 20’s should demand continue to decline. OPEC has price controls on this and can at least choose a bottom on price by cutting supply, but it is still a good idea to buy smaller chunks periodically in order to minimize risk. Yes, you will leave some gains on the table, but you will also mitigate potential losses as well, should your timing be less than ideal.