Exxon Mobil (NYSE: XOM) stock is up more than 45% this year. That's a significant improvement from 2020 when it declined by 41%. Now that gas prices are more stable and demand for travel has kept them up, the top producer has been performing better and thus, been a much better investment.
The company is coming off one of its best quarters in years, when it reported earnings of $6.8 billion for the period ending Sept. 30. That's also the third straight quarter where Exxon posted a profit and increased its bottom line. And Exxon is looking to be more efficient moving forward as it plans to cut down on capital spending by as much as 33% (compared to its pre-pandemic plans) until 2027. And by then, the company hopes to have doubled its earnings from 2019 when its profit for the year was $14.3 billion.
Although Exxon looks expensive today, trading at a price-to-earnings multiple of more than 50, that's largely due to adverse conditions due to the pandemic. On a forward basis, it's trading at a multiple of just eight, suggesting that analysts see things continuing to improve for the oil and gas company.
Multiple analysts have recently set price targets of more than $70 for the stock, suggesting that it could rise more than 15% from where it is today. The bigger incentive may lie with its dividend, as Exxon pays a top yield of 5.9%, which is significantly higher than the S&P 500 average of just 1.3%.
If you're okay with the risk of investing in oil and gas, Exxon is one of the better stocks to buy in the segment today.
