Source: PaxForex Premium Analytics Portal, Fundamental Insight

ExxonMobil surged to an intraday all-time high of $123.75 per share on April 12, marking a significant milestone for the oil giant. While it has experienced a slight pullback since then, Exxon continues to demonstrate substantial gains for the year, more than doubling in value over the past three years.

With a current market capitalization of $474 billion, Exxon is on the brink of achieving a remarkable milestone as it inches closer to becoming the first half-trillion-dollar energy stock. Investors are increasingly favoring Exxon, contributing to its ongoing rally and signaling potential for further growth.

Energy has emerged as the top-performing sector in the S&P 500 this year, boasting a remarkable 12% increase year-to-date. Surprisingly, energy has outpaced tech stocks and other growth-oriented segments of the market, including communications, industrials, and financials.

Despite comprising only 4% of the S&P 500, the energy sector's recent performance underscores a broader trend: the resurgence of value-oriented sectors driven by robust earnings growth. The dynamic nature of oil and gas prices, influenced by supply and demand dynamics, has contributed to this trend. Despite concerns about inflation and rising interest rates, strong demand has positioned oil as a contributor to inflation rather than a victim, particularly noteworthy as the Fed considers its monetary policy stance amid persistent inflationary pressures.

Exxon's strategic utilization of its significant gains to reduce debt has enhanced its financial resilience, particularly amidst rising interest rates. This prudent approach has effectively minimized its interest expenses, further bolstering investor confidence in the company's long-term prospects.

ExxonMobil has demonstrated remarkable financial resilience, funding its operations, capital expenditures, dividends, and buybacks through robust business gains rather than relying on debt or depleting its cash reserves. This prudent approach has shielded Exxon from the adverse impacts of higher interest rates, positioning it favorably amidst prevailing market conditions.

In contrast, many companies heavily investing in renewable energy are currently grappling with profitability challenges amid an industry-wide downturn. Exxon's ability to generate substantial cash flows, maintain impeccable financial health, and offer various avenues for rewarding investors underscores its attractiveness to shareholders, particularly in an environment characterized by elevated interest rates.

The company's long-term strategies, including reinvesting in the business, low-carbon initiatives, and strategic acquisitions, further enhance its growth prospects and resilience. Exxon's commitment to returning value to shareholders through dividends and buybacks, coupled with its prudent financial management, instills confidence in its ability to navigate uncertainties and capitalize on opportunities in the evolving energy landscape.

With Exxon poised to announce its Q1 earnings on April 26, investors anticipate another strong performance, buoyed by favorable market conditions. The Energy Information Administration's bullish outlook on Brent crude oil prices provides an additional tailwind for Exxon, supporting its growth initiatives and strategic acquisitions.

Exxon's investments in low-carbon efforts, including carbon capture and storage, underscore its commitment to sustainability and profitability. The company's focus on generating attractive returns from low-carbon investments aligns with its emissions reduction targets and long-term goal of achieving net-zero emissions by 2050.

While oil price volatility remains a factor to watch, Exxon's diversified portfolio and strong fundamentals position it well to create value for patient shareholders. With a balanced price-to-earnings ratio of 13.4 and a compelling dividend yield, Exxon presents an attractive opportunity for investors seeking quality, dividend-paying companies with strong growth potential.

As long as the price is above 113.00, follow the recommendations below:

• Time frame: D1
• Recommendation: long position
• Entry point: 119.76
• Take Profit 1: 125.00
• Take Profit 2: 130.00

Alternative scenario:

If the 113.00 level is broken-down, follow the recommendations below:     

• Time frame: D1
• Recommendation: short position
• Entry point: 113.00
• Take Profit 1: 109.00
• Take Profit 2: 104.00