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Here's Why Hold Strategy is Apt for ExxonMobil (XOM) Now

Exxon Mobil Corporation XOM is a leading integrated energy player. In the past year, the firm, carrying a Zacks Rank #3 (Hold), has gained 7.7%, outpacing the 0.5% improvement of the composite stocks belonging to the industry.

What's Favoring the Stock?

The price of West Texas Intermediate crude is currently higher than the $70-per-barrel mark. The positive trajectory in oil price is a boon for ExxonMobil’s upstream operations. Also, it has a pipeline of key projects in the Permian – the most prolific basin in the United States – and offshore Guyana. In the Permian, ExxonMobil has an inventory of more than 8,000 well locations, with the integrated energy major estimating a net of 10 billion oil-equivalent barrels of recoverable resources. In offshore Guyana, it made several discoveries estimated at more than 10 billion oil-equivalent barrels of recoverable resource.

Like upstream businesses, ExxonMobil also benefits from its strong refinery utilization. The firm has solid support for transitioning to a lower-emission future. XOM said that its new initiatives related to lower emissions comprised four large-scale carbon capture and storage opportunities.

Risks

The upstream business of the integrated firm is highly exposed to volatility in oil and gas prices. Also, ExxonMobil is offering a lower dividend yield than the composite stocks belonging to the industry.

Stocks to Consider

Better-ranked players in the energy space include Enterprise Products Partners EPD, Sunoco LP SUN and Eni SpA E. While Enterprise Products and Sunoco sport a Zacks Rank #1 (Strong Buy), Eni carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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Enterprise Products has a stable business model and is not significantly exposed to the volatility in oil and gas prices. It generates stable fee-based revenues from its extensive pipeline network that spreads across more than 50,000 miles, transporting natural gas, natural gas liquids, crude oil petrochemicals and refined products.

Sunoco, a distributor of motor fuel to approximately 10,000 convenience stores, has a stable business model. For this year, SUN has witnessed upward earnings estimate revisions in the past 30 days.

Eni is a leading integrated energy player. By mid-century, Eni has a goal to achieve carbon neutrality, which is quite encouraging. In the past 30 days, the stock has witnessed upward earnings estimate revisions for this year.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Exxon Mobil Corporation (XOM) : Free Stock Analysis Report

Enterprise Products Partners L.P. (EPD) : Free Stock Analysis Report

Eni SpA (E) : Free Stock Analysis Report

Sunoco LP (SUN) : Free Stock Analysis Report

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Zacks Investment Research