1 No Brainer Bargain Stock to Buy

Exxon Mobil share price has more than doubled over the past three years. Coincidence? I think not! Right now, it’s rocking a perfect 9 on the Piotroski Score. So, if you’re on the hunt for a solid investment, Exxon Mobil might just be the catch you’ve been fishing for.

What’s the Piotroski Score, you ask? It’s a nifty scoring system made up of nine different factors that help you size up a company’s investment potential. This score can swing between 0 and 9 and gives you an inside look at a company’s financials—stuff like profitability, cash flow, and how well the business is run.

But there’s more to Exxon’s winning streak than just a knockout Piotroski Score. With the fossil fuels market roaring back to life, let’s dig into why Exxon Mobil (XOM) is such a catch right now—and how the company is laying the groundwork to thrive in an increasingly green world.

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Is Exxon Mobil The Holy Grail of Dividends? 

Still wearing its dividend aristocrat crown, Exxon Mobil is basically a jackpot for anyone craving steady passive income. We’re talking about a 40-year track record of never missing a payout, and not just that—the company has even increased its dividend for the last 24 consecutive years.

Recent financial moves have fortified Exxon’s cash flow, keeping its dividend promises alive and well. In a landscape where oil price swings have led giants like Shell to slash their dividends, Exxon stood its ground.

That resilience hasn’t come out of thin air; it’s fueled by stunning growth in the company’s profits. Picture this: After posting a loss of $5.25 per share in fiscal 2020, Exxon flipped the script in 2022, boasting what it dubbed “industry-leading” earnings of $13.26 per share.

But hold on, there’s more. Thanks to its lucrative projects in Guyana and the Permian Basin, Exxon saw its free cash flow surge, with a year-over-year production growth north of 30%.

Feeling confident, Exxon upped its quarterly dividend from 88 cents to 91 cents, nudging its current yield to 3.39%.

And don’t expect Exxon to tighten the purse strings anytime soon. The balance sheet couldn’t be healthier. Its net debt-to-capital ratio has slimmed down to around 5%, and there’s chatter about potentially buying back another $35 billion worth of shares in the next two years. So, if you’re in it for the long haul, Exxon is shaping up to be a pretty reliable dance partner.

Is Exxon Ready For The Green Revolution?

As the call for a greener future gets louder, you can practically feel the sweat forming on the brows of big oil execs. They’re standing at a crucial crossroads right now, juggling the massive challenge of reshaping their industry’s image. And it’s not just about looking good on paper or winning over the eco-conscious crowd.

Take Exxon Mobil, for example. They recently caught everyone’s attention with their move to acquire Denbury Resources. Why would an oil giant be interested in another oil company? The answer is carbon dioxide—yep, you heard right.

Denbury is a wizard when it comes to using CO2 to give new life to old oil fields. They’re like the fountain of youth for worn-out wells. They pump CO2 in to ramp up the pressure, which helps get more oil out.

What’s genius is that they use CO2 that either naturally occurs or is captured from industrial spots, pumping an eye-popping 4 million tons back into the Earth each year.

But wait, there’s more. Denbury isn’t just any acquisition; it’s much more when it comes to carbon capture. They’ve got an all-set-to-go setup designed for grabbing, using, and storing carbon (that’s CCUS for you acronym lovers).

Once Exxon gets the keys to the kingdom, they’ll inherit the largest CO2 pipeline network in the U.S.—we’re talking about a network stretching over 1,300 miles, with 925 of those miles conveniently located in the Gulf Coast, a major hub of carbon emissions.

Denbury also comes with 10 primo spots for onshore carbon storage. This is a game-changer for Exxon in fast-tracking their shift to a more carbon-friendly operation. By combining Denbury’s savvy tech with what they already have, Exxon can potentially cut regional emissions by a jaw-dropping 100 million metric tons annually.

And hey, the icing on the cake? Thanks to some legislation—The Inflation Reduction Act, to be precise—companies that jump into carbon capture get some tasty tax breaks. With Denbury’s kick-butt infrastructure now part of Exxon’s toolkit, they’re more than ready to take advantage of these financial goodies.

Is It A Good Time To Buy Exxon Stock?

If you’re on the hunt for a stock that’s a cash-cow when it comes to dividends, Exxon Mobil is pretty much the gold standard.

Picture this: they’ve been cutting dividend checks for 40 straight years and upping that payout for the last 24. That’s not just consistent; that’s legendary. The kicker? They turned their financial ship around big time, swinging from a loss of $5.25 per share to raking in a whopping $13.26 per share. So yes it’s fair to say that they’re in solid shape.

What about the nitty-gritty of their operations? Well, Exxon’s been making some game-changing plays. They’ve got some lucrative plays going in Guyana and the Permian Basin that are paying off handsomely. How handsomely? Try a year-over-year production spike of over 30%. This cash influx has let them bump up their quarterly dividend from 88 cents to 91 cents, nudging the yield to a tempting 3.39%.

Don’t just look at the flashy numbers; their financial backbone is sturdy too. The net debt-to-capital ratio is a lean 5%, and there’s buzz about a jaw-dropping $35 billion share buyback in the pipeline. If you’re thinking long-term, you’re looking at a stock that seems built to last.

But what’s the deal with Exxon and the ever-pressing green wave? Their recent acquisition of Denbury Resources isn’t just business as usual. This is Exxon winking at the future. Denbury’s a pro at injecting CO2 to juice up old oil fields, and they bring a turnkey carbon capture system to the table. Translation: Exxon’s got a shiny new tool in their kit to race toward a greener, less carbon-loaded future.

Oh, and there’s a cherry on top. The Inflation Reduction Act is waving some tasty tax breaks for companies dipping their toes in carbon capture. With Denbury’s tech now under Exxon’s roof, they’re lined up to nab those perks.

So, you’re probably wondering, should you buy Exxon Mobil stock right now? If a robust dividend history, solid financials, and forward-thinking strategies get your engine running, Exxon looks like a pretty darn good. 

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.