Shares of Mobil Corp. are on track for their first record close since 2014, another milestone in a successful year for energy stocks.
The oil giant’s stock, which was up 1.7% at $105.16 midday, is expected to close above $104.38 to surpass its previous closing high on June 23, 2014. Shares gained 72% this year and 9.5% in June alone.
Exxon’s rally coincides with a surge in crude prices, fueled by Russia’s invasion of Ukraine, which has boosted oil companies’ business prospects. Brent crude has soared more than 50% in 2022 and is trading above $100 a barrel for the first time since 2014.
The energy sector is by far the best performing sector in the S&P 500, up 67% in 2022, while the broader US equity index is down 13%.
Investors have generally flocked to cheap value stocks as the Federal Reserve begins its campaign to raise interest rates to combat runaway inflation.
While many tech stocks are trading at high valuations based on future growth expectations, energy stocks tend to trade at cheap multiples. Exxon traded this week at 11 times its expected earnings over the next 12 months, compared to 17.6 times for the S&P 500, according to FactSet.
Exxon has long been a favorite among value investors. The oil company’s predecessor was recently hailed at the annual meeting of Berkshire Hathaway Inc..
led by famed investor Warren Buffett.
“I’m fundamentally in love with Standard Oil,” Berkshire vice-chairman Charlie Munger said at the meeting. “I want the rest of the world to work as well as our big oil companies.”
Another record close would mark a return for Exxon following its departure from the Dow Jones Industrial Average in August 2020. Exxon had been the longest-serving member of the blue chip benchmark, which it joined in 1928 as the Standard Oil of New Jersey. . As recently as 2013, Exxon was the largest US company by market value.
Energy stocks continued to struggle in subsequent years and were slammed in 2020 as the Covid-19 pandemic sapped demand for fossil fuels and oil prices plunged.
Write to Karen Langley at [email protected]
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