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JimVanMeerten (67.33)

A little gas could be good for you

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September 30, 2010 – Comments (1) | RELATED TICKERS: XOM

Exxon Mobil Corporation (XOM) is a big company with big profits and a big following.  Their principal business is energy, involving exploration for, and production of, crude oil and natural gas, manufacturing of petroleum products and transportation and sale of crude oil, natural gas and petroleum products. XOM is a major manufacturer and marketer of basic petrochemicals, including olefins, aromatics, polyethylene and polypropylene plastics and a wide variety of specialty products. XOM is engaged in exploration for, and mining and sale of coal, copper and other minerals.

I look at XOM as a triple play.  Since they purchased XTO, one of the largest natural gas companies they have a triple whammy in oil, natural gas and plastics.  If natural gas prices recover and industries complete their planned conversions to NG some good profits could fall to the bottom line.

Buying XOM is almost like buying an energy commodity ETF but better.  The stock came under my notice when it recently hit 10 new highs in the last 20 sessions and earned a 100% Barchart technical buy signal.  This behemoth went up 5.42% in the last month and recently traded around 62.19 well above its 50 day moving average of 60.75.  The stock has a 14 day Relative Strength Index that is 61.43% and still rising.

For a stock this big the Wall Street brokerage firms have some aggressive increases in sales and earnings projected.  The analysts have 9 buy and 10 hold reports published and predict sales will increase 22.60% this year and 10.60% next year.  The EPS projections are even better with projected increases of 43.10% for this year, 10.30% next year and a 5 year annual growth rate of 11.87% expected.

I like that short interest is shrinking.  The smart money was shorting 98 million shares back on 5/14 and that has dropped to only 33 million shares recently.  That's a good sign when short shares keep getting covered.

This big company has a big following and general investor interest is high.  On Motley Fool the CAPS members vote 7,294 to 482 that the stock will beat the market and the All Stars agree 1,668 to 76.   Articles on the stock were positive 26 to 3.

My thinking is that as the world economies recover they will consume more energy making XOM's world wide position in oil, natural gas and plastics a good place to be positioned.

My buy points are:
1 - Great world wide placement in energy and plastic in a recovering economy

2 -  Recent price appreciation in 50% of the last 20 trading sessions

3 -  Wall Street analysts still recommending accumulation based on double digit projections of increases in sales and earnings

4 -  A wide and positive general investor interest.

Jim Van Meerten is an advisor to Marketocracy Capital Management who uses his model portfolios not only to manage their mutual funds but also their clients Separately Managed Accounts. You can read his blogs about those model portfolios and investing here and on Barchart Portfolio Blogs. Please leave a comment below or email JimVanMeerten@gmail.com.

Disclosure: Jim Van Meerten through Marketocracy Capital Management has an interest in the stocks mentioned in this blog.

1 Comments – Post Your Own

#1) On September 30, 2010 at 3:12 PM, barich1 (74.84) wrote:

Don't forget it has a nice dividend too.  I made a relatively large buy (for me) when it hit the upper 50's and plan on keeping it for a long time.

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