Is Exxon Mobil (XOM) the Best Very Cheap Stock to Buy Right Now?

Exxon Mobil (XOM) has long been a staple in the energy sector, and its recent performance has raised questions about whether it is the best very cheap stock to buy right now. With a market capitalization of over $480 billion, Exxon Mobil is one of the largest publicly traded companies in the world. Its stock price has been volatile in recent years, but it has shown signs of recovery in 2024. As of February 19, 2025, Exxon Mobil's stock price is around $108.89, which is a significant discount compared to its 52-week high of $126.34.

Exxon Mobil's valuation metrics suggest that it may be undervalued compared to its peers and historical averages. Its trailing PE ratio is 14.07, which is lower than its historical average of around 17. Its forward PE ratio is 14.69, indicating that the market expects the company's earnings to grow in the future. Exxon Mobil's P/S ratio is 1.38, which is lower than its historical average of around 1.5. Its P/B ratio is 1.82, which is lower than its historical average of around 2. These valuation metrics suggest that Exxon Mobil's stock price may be relatively cheap compared to its fundamentals.

Exxon Mobil's dividend history and yield are also attractive. The company has a current annual dividend of $3.96, which amounts to a dividend yield of 3.59%. This yield is higher than the average yield of other energy stocks, which is around 2.5% to 3%. Exxon Mobil has also increased its dividend for 44 consecutive years, which is a testament to its financial stability and growth. The company's dividend payout ratio is 50.51%, which is lower than the industry average of around 60%. This indicates that Exxon Mobil is retaining a significant portion of its earnings for reinvestment, which is a positive sign for future growth.

However, Exxon Mobil faces several risks and challenges in the near and long term. The energy transition and climate change regulations pose a significant threat to the company's core business. Stricter regulations and policies could lead to reduced demand for fossil fuels, impacting Exxon Mobil's revenue and profitability. Commodity price volatility, geopolitical risks, technological disruption, regulatory and legal challenges, and operational risks could also impact the company's stock price. To mitigate these risks and challenges, Exxon Mobil should diversify its business model, invest in renewable energy and carbon capture and storage technologies, strengthen its risk management and operational safety measures, engage with stakeholders, and maintain a strong balance sheet and liquidity position.

In conclusion, Exxon Mobil's valuation metrics, dividend history, and yield suggest that it may be the best very cheap stock to buy right now. However, the company faces several risks and challenges that could impact its stock price. Investors should carefully consider these factors before making a final investment decision. By effectively managing these risks and challenges, Exxon Mobil can enhance its long-term prospects and maintain a stable stock price.