Exxon-Mobil: Stand aside, due to weak U.S. gasoline demand

Posted Apr 16th 2009 6:00PM by Joseph Lazzaro
Filed under: Exxon Mobil (XOM)

In this market, with its tumult and Dow-stocks-turned-into-dollar-menu-stocks, there are stock plays you jump at, and then there are plays that must wait for another day.

Put Exxon-Mobil Corporation (NYSE: XOM) in the latter category. Likely U.S. fuel demand declines (doesn't that sound funny?) for at least much of 2009, and probably into 2010, will weigh on refining/gasoline revenue.

As a result, after-tax operating earnings are likely to fall 20-30% in FY 2009, before rebounding in mid-2010, aided by an improving U.S. economy. Further, Exxon-Mobil's reserve replacement rate is above the sector's average, but absent a sudden, unexpected surge in fuel demand from U.S. motorists this year, XOM's metrics are not compelling enough to warrant portfolio inclusion.

Stock Analysis: Don't Buy Exxon-Mobil. Exxon-Mobil is a moderate-risk stock. If you already own XOM, Hold your shares.

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Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.

Tags: gasoline, integrated oil companies, oil, refiners

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Reader Comments (Page 1 of 1)

4-16-2009 @ 11:30PM

chedar888 said...

The economic collapse is due to oil prices. The world economy can not withstand a crude oil price of $147 per barrel. Try to see that after the housing debacle is resolved, if the price of oil picks up again, the world will be back to recession or even depression.

4-17-2009 @ 12:24AM

jmcdonald said...

i suppose the bs war didn't have anything to do with it?I suppose the free trade,world economy,illegal mexicans,government jobs,importing products, had nothing to do with it.Maybe a corrupt government,wall street,bankrupt banks,idiot presidents-reagan,bush,clinton,bush,now obama

4-17-2009 @ 1:49AM

JCH said...

Oil had nothing to do with the economic crisis.

5 million EXTRA foreclosures, much of exotic subprime, and 5 million additional EXTRA foreclosures waiting in the wings - that would blow up any financial system.