Exxon Mobil (XOM)

XOM is clearly tracking the price of oil, which has been in a trading range of high-60s to high-80s. We're in a stage of curtailed production by OPEC+ and shale producers. Then, the price will rise again. Can China's demand get worse? If the US economy avoids a hard landing, then oil and XOM will pick up in price.

He just bought it for its dividend and valuation. This is his sole energy position.

Are too many variables in crude oil and prices will fluctuate. What will OPEC+ do with supplies? XOM is a great company.

Pays a good dividend and did a good thing by buying Pioneer.

Yes, they will. You will get Exxon stock in the deal. He sold Pioneer to avoid the arbitrage. 

He still likes energy and still likes this company but sold at recent highs and rotated into other sectors with higher upside. It pays a 3.3% dividend and is still trading above its 200 day moving average. He will probably re-buy it at some point.

Very strong technical chart, with rising highs and lows. Trading above the rising 200-day MA. Outpacing the S&P 500 since late 2020. Continued constrained global oil supply, with demand picking up. Yield is 3.1%, expected to grow.

Demand for energy will increase, for liquified natural gas for example. The Saudis are talking about more production cuts. At least, energy prices will stay at this level. Also, the energy stocks have been consolidating, so the next phase will see these stocks sharply higher.

They reported a mixed quarter. Refining is not doing so well. Low natural gas prices haven't helped. Oil is up to $80 now from $60, so profits should rise. China should see growth (he doubts a return to lockdowns). If a recession keeps getting delayed or doesn't happen, then energy prices should stay high and that will be fine for Exxon. Trades at 11x PE and pays a 3.5% dividend.

We're already seeing a catch-up trade in energy. As the Saudis cut oil production so do these companies who are managing capex well. There's a little but of M&A. Free cash flow yield is around 12% (the best sector on the S&P) for the industry even while earnings are down from last year. This is a great time to dollar-cost average on oil companies. China will stimulate its economy out of necessity (youth unemployment is too high there).

The Saudis need $75-80 per barrel just to meet their social obligations (government programs) to avoid social unrest. Oil prices will recover.

Buy oil stocks, don't sell. Oil is seeing a floor here. Buy partially, not all at once.