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Exxon Mobil Corporation Stock Is Way Oversold — Buy Now!

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A number of developments at ExxonMobil Corporation (NYSE: XOM ) have driven XOM stock down to its lowest point since the oil price crash of 2014. XOM stock is presently at $76 a share and it presents a great entry point for people who are looking to initiate or add to their long-term energy position.

Readers of my column and investors in my investment advisory newsletter, The LibertyPortfolio , know that I consider energy to be a core holding in any long-term diversified portfolio.

Why Energy?

Energy is a central part of the human experience, is wrapped into our DNA, and is part of every single aspect of our lives from the moment we wake up until the moment we go to sleep. Any of the big explorer and producer socks would make a great addition to your portfolio, but right now XOM stock presents a great buying opportunity and here's why.

The market reacted poorly to the fourth-quarter earnings results from XOM stock. ExxonMobil stock is down 15% since the report. This is a perfect example of why consensus estimates and any occasional miss mean very little in the long term and actually gives one the opportunity to get in on a quality stock at a discounted price.

The Liberty Portfolio looks for these kinds of opportunities because there's a lot more money to be made in a terrific company and stocks like XOM stock when the market overreacts.

Why XOM Stock?

ExxonMobil stock reported earnings of 88 cents per share, which was below last year's 90 cents per share and below the estimate of $1.06 per share. Revenues exploded from $56.4 billion a year ago to $66.5 million this year, but that missed the estimate of $74.4 billion.

Still, the results are very impressive. The upstream division saw earnings of $2.5 billion, up from $1.5 billion a year ago, despite the fact that production was only about 3% less the same quarter last year. The downstream segment delivered earnings of $952 million, which was a decline from last year's $1.24 billion. The chemical division contributed $63 million to earnings. And, most importantly, XOM stock and cash flow was almost $9 billion in just the fourth quarter.

These are all exceptional numbers. And, of course, earnings are going to fluctuate based on the price of oil and natural gas.

However, there was a development which was a huge surprise to me. This does, in fact, reduce what I thought might be possible in terms of upside. Exxon Mobil withdrew from a joint venture with Rosneft, the Russian state-owned exploration and production company.

This joint venture was projected to spend as much as $500 billion developing assets in the Black Sea and the Arctic.

This would've been a gigantic project that I believe would've been very successful for Exxon Mobil stock. Unfortunately, sanctions were in place on Russia which prohibited XOM stock from engaging and profiting from this venture.

My expectation was that secretary of state Rex Tillerson was specifically named for that position because of his tenure as CEO of Exxon Mobil, and that this was a clear signal that sanctions would eventually be lifted against Russia, specifically so that Exxon Mobil could benefit from this partnership.

So, I am frankly shocked to discover that this deal never came to fruition. It may also suggest that Tillerson might be replaced as Secretary of State - but that's another matter.

Bottom Line on XOM Stock

Regardless, while that removes some of the long-term upside for Exxon Mobil stock price, the company said it will invest $50 billion in United States assets. That's great too. More jobs for Americans, and it will generate revenue for Exxon Mobil.

It should also be noted that BP PLC (NYSE: BP ) may be the likely beneficiary of this joint venture failure, because BP is based in England, there are are no such sanctions from England on Russia, and BP is already involved in a joint venture with Rosneft, which, down the road, may be expanded.

That's a whole other reason to buy BP as well as Exxon Mobil.

Lawrence Meyers is the CEO of PDL Capital, a specialty lender focusing on consumer finance and is the Manager of The Liberty Portfolio at www.thelibertyportfolio.com. He owns shares of BP. He has 23 years' experience in the stock market, and has written more than 2,000 articles on investing. Lawrence Meyers can be reached at TheLibertyPortfolio@gmail.com.

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The post Exxon Mobil Corporation Stock Is Way Oversold - Buy Now! appeared first on InvestorPlace .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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