Sooner or Later, This Blue Chip Will Adapt to the Times

The past decade has seen the rise of economically viable forms of alternative energy. That’s occasionally spelled trouble for fossil fuel companies. Last year’s drop in oil into negative territory, fueled by traders trying to get out of a bad trade, has now become a distant memory.

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  • But the rise of socially responsible investing, now dubbed ESG for environmental, social and governance, is looking to make some big changes to big oil. The biggest potential change? Going carbon neutral.

    With ExxonMobil (XOM) facing a board proxy fight over its carbon emissions this week, and losing two board seats as a result, it’s clear that the oil giant is still valued reasonably. And that as the energy market adapts, so will the company, even if it’s on the slower end than many of the clean energy plays out there today.

    Shares of the energy giant are up nearly 29 percent in the past year, lagging the S&P 500 by 9 points. Earnings have been negative and revenue has barely nudged.

    That’s likely to change in time as the market stabilizes, and as the company starts to embrace energy sources outside the hydrocarbon universe.

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  • Action to take: At current prices, shares yield nearly 5.9 percent, a solid entry point for dividend investors. The dividend was kept steady last year, which doesn’t make for a dividend growth stock, but it sure beats a cut.

    For traders, the company is likely to continue trending higher with a stronger economy. The August $65 calls, going for about $1.05, offer an inexpensive way to bet on shares trending higher over the summer driving season.

     

    Disclosure: The author of this article has no positions in the stock mentioned here, but may make a trade on this company after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.

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