1 Reason To Avoid Exxon
With new cases of the coronavirus spiking in the US and worldwide .
With the already historic unemployment levels and job losses in recent months.
And with many Blue Chip stocks looking vulnerable when they’re supposed to be among the best areas to invest your capital.
There are few safe places to invest today. And this number grows smaller every day this crisis lasts.
The key to continue compounding your investments and build wealth is to keep investing well over time.
But another huge part of this that few think of is also losing as little capital as possible.
The fewer investment losses you have the more capital you keep. And the more capital you keep the faster you achieve your retirement goals.
In recent articles I’ve shown you several stocks to avoid investing in…
- 3 Reasons To Avoid Target
- 2 Reasons To Avoid Lowe’s
- 1 Reason To Avoid AT&T And Its 7% Dividend
- 4 Reasons To Avoid Kohl’s
- 1 Reason To Avoid Autozone
- 2 Reasons To Avoid Kraft Heinz
Today I want to show you another stock to avoid so you can grow your investment portfolio safely.
1 Reason To Avoid Exxon
- The Extreme Drop In Revenue, Profits, and Cash Flows In The Last 10 Years
Exxon is one of eight oil “supermajors” in the world.
And like the other oil majors it’s a dying breed due to the rapid adoption of renewable energies.
In the last decade Exxon’s revenue fell 42.8% from $372.5 billion in 2010 to $213.9 billion in the trailing twelve months (TTM) period.
Its operating income fell 90.1% from $42.5 billion in 2010 to $4.2 billion in the TTM period.
Its operating profit margin fell from 11.4% in 2010 to 2% in the TTM period.
Its earnings per share fell 73% from $6.22 in 2010 to $1.68 per share in the TTM period.
And its free cash flow production dropped from $21.5 billion in 2010 to negative $1.7 billion and unprofitability in the TTM period.
EDITOR’s NOTE – Trailing twelve months just means the last 12 months consecutively.
These are drastic falls in only 10 years. And it’s going to continue…
Renewable energies aren’t just some pipe dream anymore.
Costs have fallen so much that renewable energy adoption is accelerating.
- Solar prices fell 90% from 2009 to 2020.
- And wind turbine prices fell by 55-60% since 2010.
And these prices are only going to continue falling…
This has led to renewable energy generating an estimated 17% of all power in the United States at the end of 2020.
Which is up from 10% in 2007.
Combine this with more people wanting to take better care of the planet, and oil usage for energy production is on its way to extinction.
I don’t know if this will happen in the mainstream in the next year, the next 5 years, the next 20 years, or sometime in between… But it’s inevitable.
And it’s already crushed Exxon’s revenue, profits, and cash flows while we’re still in the beginning stages of this renewable energy adoption.
Its share price in the last decade reflects these falls too…
From January 2010 to today in late September 2020 its share price is down 54.3%.
Oil’s decline will continue.
And with it, so will Exxon’s revenues, profits, cash flows, and the price of its shares.
Yes, Exxon and the other oil supermajors are investing in renewable technologies… And yes, they may be able to transition well.
At this point that hasn’t happened though.
And I don’t base my recommendations based on what could or might happen… But what is happening now.
Because of these falls, Exxon will have to cut its dividend payout at some point too.
And when it cuts its dividend it will remove one of the major reasons people still own Exxon stock… Its large dividend.
For the reasons of enormous decline in the last decade – and its inevitable continued decline – I recommend you avoid investing in Exxon Mobil. Even though it pays you a 10.2% dividend.
Click the links below to see the stocks we recommend helping Depression Proof Your Portfolio.
- 3 Stocks That Will Earn You High Returns In The Coming Depression.
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- 3 Stocks To Depression Proof Your Portfolio – Stock #3
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Disclosure – Jason Rivera is a 13+ year veteran value investor who now spends much of his time helping other investors earn higher than average investment returns safely. He does not have any holdings in any securities mentioned above and the article expresses his own opinions. He has no business relationship with any company mentioned above.