ExxonMobil Stock Hits an All-Time High. Is It Still a Good Buy?

Key Points
ExxonMobil's stock is up big this year, but its valuation remains in line with the average stock on the S&P 500.
Analysts have been upgrading their price targets, but they don't expect much more upside in the short run.
Oil and gas stocks can experience significant volatility due to their exposure to oil prices.
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Oil prices are rising, and that means oil and gas stocks are all the rage this year. Unsurprisingly, one of the biggest names is skyrocketing in value, and that's ExxonMobil (NYSE: XOM). Shares of the top oil and gas producer are up an incredible 34% this year, which is particularly noteworthy given how poorly the S&P 500 has done -- it's down 4%.
ExxonMobil has not only recently hit a new 52-week high, but it's also hit a new all-time high of $162.44. It's come down slightly from those levels as it finished Monday at just over $161, but it's still trading fairly close to its peak. The big question for investors is whether this can still be a good buy right now, or if it's destined to give back some gains in the near future.
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Just how expensive is ExxonMobil stock right now?
Although ExxonMobil shares have been red hot this year, they still trade at 24 times the company's trailing earnings. And that falls to a forward price-to-earnings (P/E) multiple of 21, based on analyst expectations of how it will do in the year ahead. That's not all that expensive when you consider that the average stock on the S&P 500 trades at a trailing P/E of 24, and a forward P/E of 21 -- ExxonMobil is right in line with those multiples.
Analysts have been boosting their price targets for the stock recently, but even that excitement has its limits; the most bullish price set in the past couple of months has been $186. The consensus analyst average, however, is just under $149, which would suggest that the stock is due to fall by around 8%.
Is ExxonMobil stock worth buying?
Despite hitting a new all-time high, ExxonMobil's stock could still rise higher this year, for a number of reasons. Its valuation isn't all that high, and oil and gas stocks have been laggards for the past few years; you could make the case that they're overdue for a rally. Plus, if the war in Iran continues and oil prices rise higher, it's certainly not out of the question for the stock to benefit from that. Furthermore, investors have been gravitating toward dividend stocks amid all the uncertainty this year, which could continue to make ExxonMobil stock, which yields 2.6%, an attractive buy.
However, investors should tread carefully with oil and gas stocks due to the volatility that can come with them, as a result of their exposure to oil prices. As long as you're willing to hang on for the long term, ExxonMobil can still make for a solid buy and be an excellent source of dividend income for your portfolio. But speculating on where the stock may go in the short term could be risky, because while there are valid reasons as to why it could go higher, that doesn't necessarily mean it will.
Should you buy stock in ExxonMobil right now?
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David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.