How many reasons are there to invest in Exxon Mobil (NYSE:XOM)? It’s hard to even count them. For one thing, XOM stock represents an energy-industry giant, so you can hold the shares for years and not worry about whether the company will continue to provide value.

Second, Exxon Mobil is transforming from a fossil-fuel driller to a clean-energy pioneer. It’s proof positive than an old company can evolve and spearhead a movement that will generate revenues while also being Earth-friendly.

Also, XOM stock offers a generous dividend yield, which we’ll reveal in a moment. Along with the stock’s share-price appreciation, as an added bonus, investors can sit back and collect dividend distributions every three months.

Speaking of share-price appreciation, some folks might be concerned that Exxon Mobil might not be the value play it once was, due to a recent rally in the stock. Let’s not forget, though, that stocks representing great companies can – and should – continue to move higher even after a strong run-up.

XOM Stock at a Glance

So, let’s start off with that juicy dividend. As of early February 2022, Exxon Mobil offered a forward annual dividend yield of 4.32%. To borrow a phrase from The Godfather, that’s an offer you can’t refuse.

Next, we can address the recent share-price rally. From mid-December 2021 to early February 2022, XOM stock ran up from $60 to $81, for a quick 35% gain. Value seekers might balk at the idea of investing in a stock that just shot up 35%. However, we should keep in mind that the Exxon Mobil share price was also trading at $81 in 2017.

In other words, a revisit of $81 was long overdue. That price point has been a stubborn resistance level for quite a long time, and it looks like XOM stock may be ready to break through it permanently.

While we’re on the topic of value investing, let’s consider Exxon Mobil’s trailing 12-month price-to-earnings ratio. It’s slightly below 15, so there’s really no need to worry about the shares being overpriced.

Old and New Energy

Even when a company is doing well, there will always be some doubters. For example, not everyone is convinced that Exxon Mobil can remain a committed clean-energy-focused business in the 2020s.

The best way to defeat the critics is through irrefutable data. Therefore, let’s turn to Exxon Mobil’s still-fresh press release covering 2021’s fourth quarter and the full year.

To start off, it’s important to understand that Exxon Mobil hasn’t just abandoned its fossil-fuel projects. Notably, the company’s production volumes in Texas’s Permian region increased by nearly 100,000 oil-equivalent barrels per day in 2021.

But again, Exxon Mobil is shifting towards a more Earth-friendly business model.

As evidence of this, in 2021’s fourth quarter, the company announced new emission-reduction plans through 2030. These plans include achieving Scope one and two net-zero greenhouse-gas emissions by 2030 in the Permian Basin.

The Cash Is Flowing

Truly, the further we delve into the data, the stronger the bullish thesis for XOM stock becomes. 2021 was a triumphant year for Exxon Mobil. In the fourth quarter, the company reported earnings of $8.87 billion — a vast improvement over the $20 trillion earnings loss from the year-earlier quarter.

While we’re diving into fiscal stats, it’s worth observing that Exxon Mobil generated a whopping $48 billion of cash flow from operating activities in 2021.

That’s the highest level for the company since 2012. Besides, it was more than enough cash flow to cover Exxon Mobil’s capital investments, debt reduction and dividend.

Turning to the topic of fiscal discipline, Exxon Mobil reduced its structural costs in 2021 by an additional $1.9 billion. With that, the company increased its total savings to nearly $5 billion compared to 2019.

On top of all that, Exxon Mobil brought its balance sheet back to pre-covid-19-pandemic levels by paying down $20 billion in debt in 2021. Again, financial discipline will be a key driver of continued success for Exxon Mobil.

The Takeaway

All in all, XOM stock is a sensible investment that can be held for years with confidence.

Sure, there will be skeptics and naysayers out there. Not everyone is on board with Exxon Mobil’s transition to a clean-energy business, after all.

That’s perfectly fine, as the company is staying disciplined and turning a profit now, proving that even an old company like Exxon Mobil can modernize and transform an industry.

— Louis Navellier and the InvestorPlace Research Staff

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Source: Investor Place