The Bill and Melinda Gates Foundation’s Low P/E Stock Picks Include Exxon Mobil Corporation (XOM)

Oil majors are generally cheap in earnings terms, and Exxon Mobil Corporation (NYSE:XOM)– another of the trust’s stock picks- is no exception, valued at 12 times forward earnings estimates. The integrated oil and gas company, one of the largest U.S companies by market capitalization, experienced a significant decline in revenue in its most recent quarterly report compared to the same period in the previous year. While Exxon Mobil Corporation (NYSE:XOM) managed to hold its profits about steady thanks to higher net margins, investors should look into how sustainable that source of earnings might be (though with oil prices high revenue may rise again in any case).

Larson and his team disclosed ownership of 7.1 million shares of BP plc (ADR) (NYSE:BP) as of the beginning of April. Market sentiment on BP is still poor, as shown by the fact that it is valued at a discount to many of its peers; for example, the forward earnings multiple is 8. The company has been selling off many of its assets, which has the potential to allow management to become more focused on the core business (though of course the oil and gas market will remain the primary driver of profitability). Income investors should note the dividend yield of over 5%.

The oil majors are somewhat appealing from a value perspective, and as we’ve mentioned BP does offer a high yield for dividend investors willing to take on the related commodity risk. Wal-Mart is troubled, but it’s possible that last quarter was particularly bad for reasons unrelated to macro conditions and so we’d want to wait for more results before drawing any firm conclusions. As for Caterpillar, it does seem like the stock should be avoided- despite the low valuation metrics- on concerns about mining capital expenditures.

Disclosure: I own no shares of any stocks mentioned in this article.