Is This Texas-Based Company a No-Brainer Buy for Energy Investors?
ExxonMobil (NYSE: XOM) may not be the world's largest oil and gas company, but the Irving, Texas-based energy giant is the largest one based in the United States. With a long corporate history going back to John D. Rockefeller's Standard Oil Trust, ExxonMobil has long been a widely held buy-and-hold blue chip stock.
But can buying in today pay off for energy investors? Year-to-date, shares have trailed major market indexes, as falling spot oil prices put pressure on profitability. To make matters worse, instead of playing it safe by scaling back on new capital projects, ExxonMobil is increasing production.
As this occurs at the time when the company remains aggressive in returning capital to investors via share repurchases and dividends, cash flow has turned negative, leading the company to increase its debt borrowing. While this may be making the stock a riskier play, that may not mean that staying away is the best course of action.
Source Fool.com
