Wall Street loves a story, often pushing stocks to extremes based on a mutually agreed-upon narrative. That feels great when the narrative is a positive one, but it can sting pretty badly when the story is negative. The thing is, mercurial investors often go too far on the upside and the downside as they extrapolate current trends into the future.
Today, that’s holding back the stocks of ExxonMobil (NYSE:XOM), Simon Property Group (NYSE:SPG), and International Business Machines (NYSE:IBM). Each is dealing with headwinds that have them in the Wall Street dog house, but all are likely to survive the troubles and thrive again. Here’s a quick rundown on each.
1. The energy revolution still has a ways to go
The big knock against Exxon is that it drills for oil, which is destined to be replaced by cleaner alternatives such as solar- and wind-generated electricity. To be fair, that’s true — but it likely won’t happen for decades (or longer). The world still needs and wants oil today. However, investors don’t care. Almost anything that has to do with oil is on the outs.
That includes Exxon, which currently offers a yield of 5% — near the highest levels in decades. Add in an industry-leading streak of 37 annual dividend increases, and there’s even more for dividend investors to like here. Now consider that Exxon has one of the strongest balance sheets in its peer group, with a financial debt-to-equity ratio of just 0.15 times, which is actually a low figure for any company in any industry. Moreover, Exxon is investing in oil production and processing opportunities that it thinks are highly desirable and that will support results for years to come.
That last point is … Continue reading at The Motley Fool