Exxon Mobil Corp. (NYSE:XOM) closed up 2.0 percent at $97.22 per share on December 16 following an upgrade to Buy from Neutral from analysts at Goldman Sachs. The analysts argue that oil and gas super majors — a group of industry titans that includes Chevron (NYSE:CVX), Royal Dutch Shell (NYSE:RDSA)(NYSE:RDSB), BP (NYSE:BP), and Total SA (NYSE:TOT) — are headed for an inflection point in 2014. Production volume is expected to grow organically for the first time since 2006 at Exxon Mobil thanks to a “positive inflection in Exxon’s production profile.”
In a note seen by Barron’s, analyst Arjun Murti argued that Exxon and the other super majors are not only gearing up for great years to come, but that they’re cheap. “On long-term metrics, Exxon shares look inexpensive versus its own history on an absolute basis and relative to the S&P 500,” he wrote. “Exxon is trading at a discount to its long-run average (1995-2013) on an absolute basis and relative to the S&P 500. Exxon’s 2014E absolute/relative P/E is 11.6X/76 percent, which is below its long-run average of 15.6X/95 percent.”
Such a combination would make Exxon Mobil an attractive buy for any investor willing to settle in for the long haul. Shares have climbed just 7.44 percent this year to date, lagging the S&P 500, but with slower index-wide growth expected for 2014, the stock could emerge a winner.