We recently compiled a list of the 10 Best Low Risk Stocks To Buy in 2025. In this article, we are going to take a look at where Exxon Mobil Corporation (NYSE:XOM) stands against the other low risk stocks.
Risk is a key consideration in investing and portfolio management, as investors generally aim to achieve the maximum return per minimum unit of risk. The true risk of a stock is impossible to measure or quantify, but there are several metrics, such as the volatility of returns or equity beta, that can gauge the magnitude of risk relative to other companies. The equity beta of a stock represents the sensitivity, or correlation, between the returns of the stock and the returns of the broad market. An equity beta below one means that the stock does not respond as much as the broad market to different events, such as macroeconomic developments, monetary policy changes, etc. When a stock with low risk (low beta) is introduced into a portfolio, the overall expected risk of the portfolio is significantly reduced, while the expected return is usually not significantly compromised, leading to a better risk/return profile.
READ ALSO: 12 Best Long Term Low Risk Stocks to Buy Right Now
There are times when the risk profile of a portfolio becomes a more important consideration than maximizing returns, such as during periods of economic uncertainty, market downturns, or when an investor nears retirement and prioritizes capital preservation over growth. In these situations, investors often shift their focus from aggressive returns, such as growth stocks, to minimizing potential losses, adjusting their portfolios to include more low-beta stocks, bonds, or other defensive assets.
Market volatility, geopolitical tensions, and changes in monetary policy can also drive investors toward safer investments to protect their capital. Understanding and managing risk, particularly through measures like equity beta, allows investors to navigate uncertain times without exposing themselves to unnecessary losses. While low beta stocks are usually more mature and low growth businesses, they can deliver strong returns during bear markets, as capital actively starts flowing into them and inflates their market valuation. Consequently, by rotating into low risk stocks at the right time, investors can achieve two goals at once – not only reduce the risk of the portfolio, but also significantly improve the potential return profile.
We believe the broad stock market is currently at a crossroads and has just entered a new “Trump 2.0 regime,” which will be dominated by unprecedented actions and measures. Not only does the new US administration employ tools such as tariffs that were not used on a large scale for decades, but it has also started some strategic political shifts that could threaten decade-long alliances (such as the US-Europe alliance). All of this, coupled with aggressive cost-cutting in federal budgets and spending, has introduced a lot of uncertainty and difficult-to-digest news for investors.
The US stock market is also in correction mode since the inauguration date, and there is no certainty about when this will stop. With many surveys showing deteriorating spending and business outlooks, a slowdown in GDP growth with a potential bear market becomes a probable scenario for the following quarters. These are the times when buying low risk stocks could significantly improve the risk profile of one’s portfolio without compromising the potential return. Low risk stocks, as gauged by the equity beta, are usually found in sectors like consumer defensive, healthcare, as well as some financials and energy, which tend to have more predictable and stable business models. Given this, we will take a look at some of the best low risk stocks to buy now.
Our Methodology
To compile our list of low risk stocks, we used Finviz to filter the companies that have an equity beta below 1.0x. Then we compared them with Insider Monkey’s proprietary Q4 2024 database of hedge funds ownership and included in the article the top 10 names with the highest number of hedge funds that own the stock.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Aerial view of a major oil rig in the middle of the sea, pumping crude oil.
Exxon Mobil Corporation (NYSE:XOM)
Number of Hedge Fund Holders: 104
Equity Beta: 0.63x
Exxon Mobil Corporation (NYSE:XOM) is a global energy company engaged in the exploration, production, refining, and distribution of oil, natural gas, and petrochemical products. It operates through three main segments: Upstream, which focuses on oil and gas exploration and production; Downstream, which includes refining and fuel marketing; and Chemical, which produces petrochemicals used in industrial and consumer products. XOM has operations in multiple regions, supplying energy to transportation, industrial, and residential markets, and invests in carbon capture, hydrogen, and biofuels as part of its long-term energy transition strategy while maintaining a focus on operational efficiency and resource development. The Texas-based company ranked first on our recent list of 11 Best Crude Oil Stocks To Buy Right Now.
Exxon Mobil Corporation (NYSE:XOM) delivered strong financial results in 2024, achieving earnings of $34 billion, their third highest result in a decade despite softer market conditions. The company generated cash flow from operations of $55 billion and delivered a return on capital employed of 13%, with their 5-year average ROCE being an industry-leading 11%. Operationally, the company achieved record performance in their Product Solutions business and reduced methane intensity by more than 60% since 2016. In the Permian Basin, XOM achieved record production from both Heritage ExxonMobil assets and Pioneer assets, projecting production growth from 1.5 million oil-equivalent barrels per day at the end of 2024 to 2.3 million barrels per day by 2030. In Guyana, the company reached record production of 650,000 barrels per day in just 10 years from discovery.
Looking ahead to 2025, Exxon Mobil Corporation (NYSE:XOM) plans to bring online several major projects expected to deliver more than $3 billion in earnings potential in 2026. The company’s long-term outlook includes plans to build an even more advantaged asset portfolio with 60% of Upstream production from advantaged assets by 2030, achieve 80% growth in high-value product sales, and take an additional $6 billion in cost out of the business. Compared to other IOCs over the last 5 years, XOM has grown cash flow from operations at roughly 15% compounded annual growth rate, more than double the closest competitor, and distributed more than $125 billion in dividends and buybacks. With an equity beta of 0.63x, XOM is one of the best low risk stocks to buy in 2025.
Overall XOM ranks 5th on our list of the best low risk stocks to buy in 2025. While we acknowledge the potential of XOM as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than XOM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
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