2 Reasons 5% Yielding Exxon Mobil Could Be One Of The Best Investments Of 2020 by Brad Thomas

in LeoFinance •  6 months ago 


  • Exxon Mobil's yield is near the highest it has been in three decades.
  • Over the long term, 5% to 10% CAGR EBITDA growth could drive 9% to 17% CAGR total returns that could double or triple what investors in the S&P 500 enjoy.
  • Exxon Mobil is about 27% undervalued, making it a very strong buy.
  • This idea was discussed in more depth with members of my private investing community, iREIT on Alpha. Get started today »

This article was coproduced with Dividend Sensei and edited by Brad Thomas.

Note: As many of you know, I frequently write on REITs, but the purpose for this article is to provide readers with other dividend-paying alternatives and also to provide some of my recent investments. My goal is to provide readers with 2-4 articles per month that are non-REIT and that are actionable investments.

In a research paper, Bank of America recently highlighted one of their favorite sector recommendations of this year. Here's what BAC wrote on Dec. 2, 2019.

XOM is our top US oil major pick for 2020

In recent weeks we had the opportunity for multiple meetings with Exxon Mobil (XOM) management, including SVP Andy Swiger, XOM’s country team in Guyana and a week on the road in Europe with Investor Relations. Our takeaway is that XOM’s strategy of counter-cyclical investment through the cycle is approaching an inflection that we think should address market skepticism on whether it can translate to meaningful outperformance vs peers.

Media reports that XOM may be accelerating asset sales align with our view that non-core disposals could exceed Street expectations and also underlines our view for upside risks to its target to double cash flow by 2025 and which our analysis suggests could support our PO of $100/sh. Ahead of 2020, XOM is our top US major oil pick. Reiterate Buy." - Bank of America (emphasis added)

We understand why BAC is bullish on oil for 2020.
(Source: SL Advisors)

Energy is trading at the biggest discount to the broader market in a decade.

(Source: Brian Gilmartin)

And while analyst EPS growth forecasts must always be taken with a healthy grain of salt, especially for cyclical industries, the fact is that the energy sector is expected to post the strongest earnings growth this year.

Decade low valuations + strong earnings growth = huge upside potential for this year, which brings me to Exxon Mobil, BAC's top pick for oil majors.

Exxon Mobil's yield is near the highest its' been in three decades.

...Originally Posted On Seeking Alpha

Author Bio:

bradthomas bio.jpg

Steem Account: @bradthomas
Twitter Account: rbradthomas

Steem Account Status: Unclaimed

Are you Brad Thomas? If so, you have a Steem account that is unclaimed with pending cryptocurrency rewards sitting in it from your content. Your account was reserved by the Steemleo team and is receiving the rewards of all posts syndicated from your content on other sites.

If you want to claim this account and the rewards that it has been collecting, please contact the Steemleo team via twitter or discord to claim the account. You can also view the rewards currently sitting in the account by visiting the wallet page for this account.

What is Steemleo Content Syndication?

The Steemleo community is syndicating high-quality financial content from across the internet. We're also creating free Steem accounts for the authors of that content who have not yet discovered the Steem blockchain as a means to monetizing their content and we're listing those accounts as the 100% beneficiaries to all the rewards. If you want to learn more about Steemleo's content syndication strategy, click here.

Posted via Steemleo | A Decentralized Community for Investors
Authors get paid when people like you upvote their post.
If you enjoyed what you read here, create your account today and start earning FREE STEEM!
Sort Order:  

Congratulations @leo.syndication! You have completed the following achievement on the Steem blockchain and have been rewarded with new badge(s) :

You published a post every day of the week

You can view your badges on your Steem Board and compare to others on the Steem Ranking
If you no longer want to receive notifications, reply to this comment with the word STOP

To support your work, I also upvoted your post!

Vote for @Steemitboard as a witness to get one more award and increased upvotes!