Is Exxon Mobil the best oil stock to buy in June?

By: Motiur Rahman
Motiur Rahman
Md Motiur enjoys researching how companies are solving challenges the world will face over the coming decades. In his spare time,… read more.
on Jun 1, 2021
  • Shares of Exxon Mobil have fallen more than 6.7% over the last three weeks.
  • However, a recent surge in oil prices could trigger the next rebound.
  • Exxon is also one of the best dividend-paying oil stocks with 35 years of consecutive dividend increments.

Shares of Exxon Mobil Corp (NYSE:XOM) ended lower last week to trade at around $58.35. The stock is now down more than 6.7% over the last three weeks. However, after the recent surge in oil prices, there is a growing optimism of a potential rebound in the coming weeks. In the latest developments, OPEC+ members have hinted ahead of the upcoming meeting that current production cuts will continue. Brent crude gained to top $70 per barrel on Monday while light crude traded at $67.37.

Does this alone make Exon the best oil stock to buy in June? Let’s take a closer look at the oil company’s fundamental analysis and see what the XOM stock chart is telling us.

Exxon Mobil is a dividend king

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Exxon Mobil is one of the best dividend-paying stocks in the oil and gas industry. The company had managed to increase annual dividend payments in each of the last 35 years, even when markets were in a financial crisis. XOM stock currently trades at a dividend yield of 5.96%, which is an attractive feature for dividend investors. One of the main reasons the company continues to keep its dividend policy intact is its business model.

Exxon is an integrated oil and gas company, which means that the business covers operations upstream all the way to the downstream. The vertical integration allows it to enjoy operational synergies that cushion it against the adverse effects of low oil prices. 

For instance, the downstream, which deals with processing petroleum products, benefits from weak oil prices while the upstream, which deals with drilling, thrives in higher oil price markets.

Shares of the company are currently priced at a forward P/E ratio of 13.42. This implies a significant earnings growth for the next 12 months.

Source – TradingView

Technical overview

Technically, Exxon Mobil stock appears to be trading in a bearish triangle formation in the 60-min chart. The stock has dropped to trade below the 100-hour moving average, trimming most of the gains made following the announcement of earnings results at the end of April.

The XOM stock looks poised for a rebound amid rising oil prices. The bulls will target profits at around $59.79 or higher at $62.26. Key support levels can be found at $56.96 and $54.44.

Bottom line: buy XOM stock to capitalize on rising oil prices

Exxon Mobil has continued to pay dividends even in adverse circumstances. The company’s stock price has pulled back in recent weeks, but now looks poised for a rebound amid rising oil prices. 

The OPEC+ members have given an indication to maintain the current production cuts, which will further boost oil prices. All these factors will help push the XOM stock price higher in the coming weeks. XOM is a great stock to buy in June.

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