Tesla Vs. Exxon Mobil Stocks in 2021: The Surprising Findings
During the past year, most of the stock market hype has surrounded a handful of stocks. Perhaps no other stock has received investor attention quite like Tesla (TSLA). That’s not surprising considering that the EV car company’s stock has returned a big 66% in 2021 alone with a stock price Around $1,200. (Beginning investment of $10,000 becomes $16,633) However, you don’t need to buy into hype stocks to get a great return. Let’s take a look at big oil stock Exxon Mobil Corp. and how it has performed in 2021.
Exxon Mobil Corp. Has Quietly Routed the Markets
You may not think about big oil stocks. After all, aren’t electric vehicles the future and not vehicles that run on oil and gas? Well, in 2021 alone, Exxon Mobil Corp. stock (XOM) has returned over 61% with a stock price around $65. (Beginning investment of $10,000 becomes $16,138) That’s on top of the fact that in this example of purchasing at the beginning of the year Exxon Mobil, a well-established company also happens to pay a sky-high 8.4 % dividend. Which would be an additional $629.01 added to your return for this year for a total return of $16,767. (More than if you purchased Tesla) You also have an additional $212.08 of dividends coming in six days on November 10th and your return would be even more if you compounded your return by reinventing those dividends in a DRIP along the way. XOM thus far has out performed Tesla if you take a look at the numbers. Why no hype for XOM ? The market can be fickle and that’s when you as an investor have to be able to cut through the noise in the market.
The Benefits of Adding A Stock Like Exxon Mobil to Your Portfolio
While Tesla is an exciting stock to hold in your portfolio, you have to bear in mind that the company’s fundamentals are rather shaky. After all, this is a company with a valuation of $1.2 trillion dollars with revenue of about $50 billion. That means that the stock is highly overrated compared to its market capitalization. Compare that with Exxon Mobil which has a valuation of $273 billion with annual revenue of $178 billion. The oil company almost generates ⅔ as much money each year as its total market capitalization!
Which Stock Would You Rather Own Turning a Market Down Turn?
Warren Buffett has a great saying about the stock market, “It’s when the tide goes out that you realize whose not wearing a swimsuit.” Sure, there are a great number of stocks that look awesome when the market is hitting new highs. However, the markets can turn at any time. When it does, which stock would you rather hold? On one hand, you have a $1.2 trillion stock with only $50 billion in revenue and no dividends versus a $273 billion dollar oil company that makes $178 billion a year and pays a 5.51% dividend right now.
How Should This Affect Your Portfolio?
Chances are that it will be hard to convince you to sell your Tesla stock for Exxon Mobil stock. However, that is not the goal here. The goal is to encourage you to not miss out on money and look beyond the “hot stocks” for hidden high performers. Here are some tips that can help you find these “hidden gems.”
1). Look for stocks hitting 52-week highs
A great way to find “hidden gems” is to look at a list of stocks hitting new 52-week highs. You can find a constantly updated list here from Market Chameleon.
2). See which one of these stocks have a low P/E ratio
Take some stocks from the list and see which ones have a low price-to-earnings ratio. This is a great indicator of a stock that is not overpriced even when hitting new highs.
3). Check if the stock pays a dividend
Finally, check which of these low P/E stocks are paying a dividend. Stocks that pay a dividend tend to hold up well when the market rolls over.
Keeping Your Portfolio In Top Shape With Quality Stocks
Make sure you have a great balance of healthy stocks. That is what will keep your portfolio strong over the long run. Sure, “hot stocks” are fun to own. However, fundamentally strong stocks will help you build serious wealth over time.
REFERENCE:
https://marketchameleon.com/Reports/Equity52WeekHighsAndLows
