Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Exxon Mobil Corporation (XOM): Why You Should Buy

Exxon Mobil Corporation (NYSE:XOM)Recently, Exxon Mobil Corporation (NYSE:XOM) posted a slight increase in first quarter earnings. I believe its prospects and growth potential make it a much better investment choice than Chevron Corporation (NYSE:CVX), ConocoPhillips (NYSE:COP) or BP plc (ADR) (NYSE:BP).


The chart below shows the stock performance of Exxon Mobil Corporation (NYSE:XOM), Chevron Corporation (NYSE:CVX), ConocoPhillips (NYSE:COP), and BP plc (ADR) (NYSE:BP) over the last four years.

XOM data by YCharts

In April 2009, all four companies traded at roughly the same price. Right as BP’s stock began taking off and distancing itself from the others, the Deep Water Horizons oil spill occurred  The huge dip in the chart at the beginning of 2010 is the result of that disaster.

BP collapsed after the oil spill and has just barely been able to climb ahead of where it was in April 2009. Today, there is an almost $80 difference in share price between BP plc (ADR) (NYSE:BP) and Chevron Corporation (NYSE:CVX).

The spill’s impact

BP has already spent $24 billion due to the oil spill. The company is currently facing federal prosecutors who are seeking to show that the government, individuals, and business are owed billions of dollars more in civil damages under the Clean Water Act. The amount may reach as high as $18 billion, bringing BP’s total loss from this spill to $42 billion.

The fact that BP might soon owe $18 billion makes it a poor investment. BP has plenty of available cash so this won’t hurt in the short term, but it will hurt the company over the long term and will hamper growth and exploration. It will be much more difficult for BP to purchase and develop new wells like the one it successfully tested off the coast of Brazil a month ago.

BP saw a decline in its profit over last year. It earned $500 million less in the first quarter of 2013 compared to 2012.


Chevron had a first-quarter earnings loss of 4.5%.  Some of that was caused by Chevron’s refinery operations, which saw profits decline 13% as two of its refineries were undergoing maintenance for much of the year. This decline will likely be reversed in 2013 as the refineries become operational again.

ConocoPhillips’ first-quarter earnings fell 27%, and the company reported a profit of only $2.1 billion, far less than Exxon Mobil Corporation (NYSE:XOM)’s $9.5 billion. That being said, ConocoPhillips (NYSE:COP) sold $950 million in assets last year. If we take that into account, the company does have profit growth year-over-year. I believe ConocoPhillips has the potential to see its stock rise over the next year or so as investors witness a continuation of its rising profits.

While Exxon Mobil Corporation (NYSE:XOM) may have only returned 33% over the last four years, it has vast growth potential. ExxonMobil distinguishes itself from the other three companies as the only one to grow its profit year-over-year. ExxonMobil’s earnings improved slightly. One of the reasons for the disparity between its earnings and say, Chevron’s, was ExxonMobil’s refinery business, which increased its profit margins. Such growth is a reflection of the underlying strength of the company.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.