Dec 22, 2020 (Baystreet.ca via COMTEX) -- The unexpected rebound in oil prices in the last few weeks ended the bear market for many oil and gas integrated firms. If this trend continues, then investors cannot ignore the dividend income potential and capital gains in 2021.
Exxon /zigman2/quotes/204455864/composite XOM +0.80% , whose dividend is $3.48 a share, is a worthwhile stock to hold. It still has a long way to go before recovering to its $71.37 52-week high. The stimulus plan in the U.S., encouraging prospects for the global economy, and the vaccine rollout are all positive catalysts for the energy sector. Investors may look at E&P firm ConocoPhillips /zigman2/quotes/207605056/composite COP +2.64% and Chevron /zigman2/quotes/205871374/composite CVX +1.12% as ways to invest in the energy space. Both companies have a manageable debt level and pay a decent dividend yield.
Last week, Goldman Sachs upgraded Exxon to a "buy" rating. Wells Fargo picked Exxon as a top E&P pick. As more analysts recommend XOM stocks, investors will not want to miss out on holding the vertically integrated firms.
The Organization of the Petroleum Exporting Countries could quash the oil stock rebound by allowing members to increase supply. That would hurt oil prices. Furthermore, the pandemic is not yet at its peak as the winter period wears on. Shutdowns will hurt demand for energy products.
If energy prices dip, initiate a position in this space or average down.
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