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1 Stock To Buy, 1 To Dump When Markets Open: Exxon Mobil, Robinhood Markets

By Jesse Cohen/Investing.comStock MarketsJun 12, 2022 08:27AM ET
www.investing.com/analysis/1-stock-to-buy-1-to-dump-when-markets-open-exxon-mobil-robinhood-markets-200625651
1 Stock To Buy, 1 To Dump When Markets Open: Exxon Mobil, Robinhood Markets
By Jesse Cohen/Investing.com   |  Jun 12, 2022 08:27AM ET
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Stocks on Wall Street tumbled on Friday, with the major averages on the Dow, S&P 500, and NASDAQ suffering their biggest weekly losses since January, after scorching hot inflation data fueled fears of more aggressive interest rate hikes by the Federal Reserve, raising the risks of recession.

S&P 500, NASDAQ, And Dow Chart
S&P 500, NASDAQ, And Dow Chart

Year-on-year, U.S. consumer prices surged 8.6% in May, the biggest increase since 1981.

The week ahead is expected to be another eventful one as the Federal Reserve prepares to make its widely anticipated monetary policy announcement on Wednesday.

While most market participants forecast a 50-basis-point rate hike, the odds for a larger 75-point move jumped following Friday’s hot CPI report.

Besides the Fed, this week’s economic calendar consists of important producer price inflation data, as well as the latest reports on retail sales and housing starts.

Meanwhile, on the earnings docket, there are just a handful of corporate results due, including Oracle (NYSE:ORCL), Adobe (NASDAQ:ADBE), and Kroger (NYSE:KR).

Regardless of which direction the market goes, below we highlight one stock likely to be in demand and another which could see further downside.

Remember though, our timeframe is just for the upcoming week.

Stock To Buy: Exxon Mobil

Oil and gas supermajor Exxon Mobil (NYSE:XOM), which saw its shares reach a new all-time high last week, could see further gains in the days ahead as investors continue to pile into the thriving energy sector amid the furious rally in oil and gas prices.

Crude futures enjoyed their seventh straight weekly gain last week, with U.S. WTI and the global Brent benchmark both climbing above $120 a barrel, on the back of lingering fears of a potential disruption in supplies in Europe and the Middle East.

WTI And Brent Oil Chart
WTI And Brent Oil Chart

Shares of XOM have gotten off to one of their best starts to a year in history, surging to a fresh record peak of $105.57 on Wednesday; they ended Friday’s session at $100.46.

At current levels, the Irving, Texas-based oil-and-gas behemoth has a market cap of roughly $423.2 billion, making it one of the world’s largest energy companies.

Year-to-date, Exxon shares have soared 64.2%, easily outperforming the S&P 500’s roughly 18% decline over the same timeframe, as the energy giant benefits from strong commodity prices, improving global demand, and streamlined operations.

Investors have also been encouraged by Exxon’s continuous efforts to return more cash to shareholders in the form of increased stock buybacks and higher dividend payouts. Exxon currently pays a quarterly dividend of $0.88 a share, providing an annual yield of about 3.50%.

XOM Daily Chart
XOM Daily Chart

U.S. President Joe Biden on Friday blamed the U.S. oil industry, and Exxon Mobil specifically, for exploiting the current supply shortage to boost profits.

Speaking after a report showed inflation accelerating to a new 40-year high in May, Biden said Exxon has “made more money than God” this year and accused it of using higher profits to buy back its stock instead of increasing output.

"Why aren't they drilling? Because they make more money not producing more oil. Exxon, start investing and start paying your taxes."

Exxon pushed back at the President’s comments, noting that it paid $40.6 billion in taxes in 2021, an increase of $17.8 billion from 2020, when it suffered massive losses of more than $20 billion amid falling oil prices and weak worldwide demand.

Stock To Dump: Robinhood Markets

There's another challenging week ahead for retail trading platform Robinhood Markets (NASDAQ:HOOD), whose stock—which sank to its lowest level on record on Friday—faces investors' fretting over the negative impact of several factors plaguing the struggling retail brokerage firm.

The latest negative news came after Securities and Exchange Commission (SEC) chair Gary Gensler unveiled plans last week aimed at making the U.S. stock market more transparent.

In what would be one of the most substantial changes, Gensler floated the idea of creating an order-by-order auction mechanism intended to help retail investors obtain the best pricing for their orders.

If enacted, Gensler’s sweeping measures to overhaul the current market structure could directly impact how brokerage firms earn revenue when processing retail trade orders.

Robinhood previously warned that any potential SEC intervention in a payment arrangement between brokerages and trading firms—known as ‘payment-for-order-flow’ (PFOF)—could pose key risks to its business model.

The practice, in which brokerage firms receive compensation for directing customers’ stock orders to different market makers for trade execution, accounts for a significant stream of Robinhood’s revenue.

HOOD Daily Chart
HOOD Daily Chart

HOOD closed at a new all-time low of $7.81 on Friday. At current levels, the Menlo Park, California-based fintech company has a market cap of $6.8 billion.

Year-to-date, Robinhood stock has lost approximately 56% as the Fed’s plans to aggressively tighten monetary policy triggered a months-long selloff in shares of unprofitable technology companies with sky-high valuations.

Even more alarming, shares of the online trading platform are a whopping 90% below their record peak of $84.12 touched in August 2021.

In general, expectations of more hawkish Fed policy tend to weigh heavily on high-growth tech stocks with lofty valuations, as it threatens to erode the value of their longer-term cash flows.

Taking that into account, shares of the beleaguered stock-and-crypto trading app will likely remain vulnerable to sharp swings in the days ahead.

1 Stock To Buy, 1 To Dump When Markets Open: Exxon Mobil, Robinhood Markets
 

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1 Stock To Buy, 1 To Dump When Markets Open: Exxon Mobil, Robinhood Markets

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Comments (23)
Vike Duke
Vike Duke Jun 13, 2022 8:00AM ET
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Dumping stock after 80%+ decline is not very helpfull. Buying stock after 60% surge in a couple of months is also not very smart. Just my opinion but when everyone is pilling money in to the energy stocks im selling.
Douglas Minick
Douglas Minick Jun 13, 2022 3:27AM ET
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Lets go Brandon.
Douglas Minick
Douglas Minick Jun 13, 2022 3:26AM ET
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Why dont you offer up the truth? Biden is an idiot and blaming American companies for price gauging is stupid. Biden would rather beg OPEC and run to Saudi’s instead of go to our oil and gas companies. He killed the Keystone ( which would’ve been completed by now) , he wont approve new pipeline for natural gas, and he doesn’t give a crap about high gas prices. He’s getting rid of 160 million barrels of our Reserves which wont do anything and he either lied or he’s senile when he said on Kimmel that we have the fastest growing economy in the world. Sorry but theres at least 20 countries fhat grew faster in Q1. We had a negative 1.9 right? The democrats spending and they’re thinking we can switch to green energy in a few years is going to crush this country. Look for china to take over Taiwan next. Facts dont care about peoples feelings. Inflation and oil started climbing January 2021. Its not PUTINS PRICE HIKE. Everyone is now worse off financially than 2 years ago. Thanks Biden.
Mohd Izhar Muslim
Mohd Izhar Muslim Jun 13, 2022 3:06AM ET
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Thank you for sharing the article 💯
Antonio Rivolta
Antonio Rivolta Jun 12, 2022 9:39PM ET
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the push for Exxon is very strong on several articles on this platform in the last few weeks
Ahmad Bilal Rana
Ahmad Bilal Rana Jun 12, 2022 7:22PM ET
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The big disappointment about this article is that it says to buy an oil company at all time highs and not to buy a young innovative financial company with huge future potential at a discount price. 2 years ago robinhood was highly anticipated IPO per these Wall St. gurus. Such articles when Oil companies were all time low during pandemic suggested everyone to buy fintech and IPO at high price. Jesse Cohen, plz at least don't fool retail investors anymore. Tesla and every innovative company went through what Robinhood is going through, where XOM will be in 20 years time either gone or a clean energy company.
ZS Beck
ZS Beck Jun 12, 2022 7:22PM ET
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Robin Hood is nothing unique, The average account size is what? 5000$?Joke. No trades no commission. Dead in the water at the moment. New cash card? JOKE. Who needs a debit card.They need to come up with something much bigger. Money lending, savings account...
Ahmad Bilal Rana
Ahmad Bilal Rana Jun 12, 2022 6:26PM ET
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This is opposite to what these financial gurus were saying about robinhood and oil companies 2 years ago. Buying robinhood at lower price is better than oil companies with all time high.
George Steven
George Steven Jun 12, 2022 6:26PM ET
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Well I don't think anyone could have predicted the Ukraine war two years ago.
ZS Beck
ZS Beck Jun 12, 2022 3:56PM ET
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I would no buy Exxon.Its little too late.Robinhood is dead fish in the water.mWith less trading , then its less commission . Avarage accconut balance is 5000$ .I skip on Robinhood. This is my personal view .
Christopher Heston
Christopher Heston Jun 12, 2022 2:24PM ET
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This guy is genius. Buy a stock selling at book value with increasing revenue every year at an all time low and buy a oil company selling at all time high. This guy has made 10 articles telling people to sell Robinhood. Tell me you have a short without telling me you have a short. Get some new material buddy
Christopher Heston
Christopher Heston Jun 12, 2022 2:16PM ET
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This guy is genius. Buy a stock selling at book value with increasing revenue every year at an all time low and buy a oil company selling
 
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