Is Now the Time to Buy Exxon Mobil (XOM)?

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Is Now the Time to Buy Exxon Mobil (XOM)?

Written by Miranda Marquit

Last week, with an announcement of a new record for Royal Dutch Shell's (RDS-B) quarterly profits, analysts were hoping for a record quarter of $13 billion in profits for Exxon Mobil (XOM). However, with "only" profits of $11.6 billion (a figure that RDS-B had), the analysts were disappointed. And, as a result, Exxon's share price has been falling steadily. Tim Brown, at TheStreet.com, points out a pattern for XOM:

The stock has developed a nice little pattern in recent quarters. It delivers its earnings announcement, the stock falls for a bit and then comes back. The last two quarters it has fallen for about a week following the quarterly numbers and it slumped for about two weeks the quarter before that. That's because as well as the company has performed, the Street wanted more.

I find this an interesting pattern, and one that can be enlightening. It looks as though the best time to buy XOM is shortly after it makes its earnings announcements. And the best time to sell is before Exxon announces its quarterly profits. Of course, timing the market for any stock is risky, and rarely works. But this apparent pattern in XOM stock is thought-provoking.

No matter what you think about Exxon's environmental record, the fact remains that it is a very solid company. The capitalization is good (Exxon has plenty of available cash), and despite the "disappointing" earnings, Exxon still was up $1.83 a share from the price for the same quarter in 2007. Exxon is also known for making prudent investments and doing what it needs to in order to cut costs and boost profits.

Obviously, with steady growth year over year, Exxon remains a solid investing choice from a bottom line standpoint -- no matter what the analysts expect quarter to quarter.

Disclosure: I do not own XOM. I do not own RDS-B.

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