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Exxon Mobil | OPEC Production Limits Lead to Higher Earnings

Current price – $112.2
Target price – $132
Growth potential – 17.6% 🔥
Dividend yield – 3.42%💵
Investment horizon – 1 year

Exxon Mobil is an American oil and gas company, one of the largest in the world. The company's shares have increased by 12.4% since the beginning of the year, which is a strong performance for a company outside the technology sector. Exxon Mobil demonstrates confident free cash flow dynamics and offers an attractive dividend yield. The fair value of the company's shares is $132, with an upside of 17.6%.

Investment thesis

🔼 OPEC has extended production restrictions. The Organization of the Petroleum Exporting Countries (OPEC) last week maintained the current quotas for the countries participating in the cartel and those that have joined the agreement. The extension of restrictions will support oil prices, which significantly affect the revenue of the oil and gas sector in general and Exxon Mobil in particular.

🔼 The American economy is feeling confident. The recent labour market report showed that the U.S. economy is in good shape. This allows for expectations of strong demand for energy resources.

🔼 Dividends and buyback. The high level of cash flow allows Exxon Mobil to regularly share profits with shareholders through dividends and share buybacks. The company offers a fairly attractive dividend yield of 3.42%. Additionally, in Q1 2024, it spent $3 bln on buybacks and has an approved plan to repurchase another $20 bln.

🔽 Risks. The key risk for Exxon Mobil shares is oil prices, which can decrease for various reasons.

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