Gathering New Information about Stocks, Health, and Sports

          As oil prices continue to break records on a monthly basis, you may think that this natural resource has reached its peak or apex and is now overbought. While such an attitude is an excellent one to have with regular equities, commodity-orientated stocks focus and differ from such traditional sentiments.
         On example which explains such a rule can be ascribed to the recent and continued success Exxon Mobil (XOM) has had throughout its career. While the company is relatively old and like other companies such as Coca-Cola, should have reached its peak by now, there is still tremendous growth opportunities for oil based stocks. While some investors may argue that oil prices are on their way down as scientific progress and ethanol investigations are leading the way to new substitutions, the truth is that any type of incredible breakthrough which truly revolutionizes the way oil is used will most likely take longer than expected. What is the result for oil corporations? Higher oil prices which, because of increasing demands, demonstrate an almost conspicuous consumption behavior for consumers. These higher prices will continue to result in increased profits and revenue for corporations which will only have the positive effect of increasing margins at incredible rates. For example in the case of Exxon Mobil, margins increased almost 200% of the rate from 2004 to 2005 juxtaposed to 2003 to 2004. In most corporations, any type of net positive margins is excellent news, but with numbers like this, the company should be in a state of euphoria. Those record earnings and profit numbers which continue to spread quarter after quarter have tremendous validity and should be great enough conviction for continued investment.
         Such numbers are not only examined and taken into action by smart investors, but by the experts as well. Over the last few months, Exxon Mobil has continued to have an upgrade to downgrade ratio of three to one where none of the sentiments, according to Yahoo Finance, are lower than to hold. While Exxon has had a few quarterly results that posted negative surprises in terms of EPS, such a sentiment can be expected with the recent hurricane season, geopolitical arguments, and other mishaps such as BP’s oil corrosion problem. However, with a now steady hurricane season and a bit of ease in terms of foreign politics, sentiments from Wall Street determining future guidance should be lower which will ultimately produce more positive surprises in terms of earnings. Nevertheless, even with the negative results, Exxon has grown throughout its tenure without any major fluctuations or leveling signaling a beautiful return on investment. Growing over 100% during the past five years may seem a bit low for speculators, but for investors, such a gain is more than acceptable.
         While everyone has their doubts regarding how the price of oil will turn in the coming years or even months, there is a more positive sentiment from Wall Street who argues that oil stocks still have some quality life in them. If you are really worried about the high fluctuations and uncertainty, there is always the possibility of hedging your bets with transportation stocks. However, if you emotionally feel stable to enter such an exhilarating venture then by all means purchase a few oil equities such as Exxon Mobil. In the end you may be paying a little bit more at the pump, but the difference is marginal compared to the capital gains you will be accruing.

-Dennis Biray
September 3rd, 2006