If You Buy ExxonMobil (XOM) Stock Today, Here's Where It Could Be in 5 Years

ExxonMobil (XOM +0.23%), one of the world’s largest integrated energy companies, has been a reliable blue chip stock. Over the past five years, its shares have risen more than 150% — outperforming the S&P 500’s gain of roughly 80% — even as oil prices went through wild swings.

Will ExxonMobil stay ahead of the market over the next five years? Let’s review its business model, catalysts, and challenges to see where its stock might be headed.

Why is ExxonMobil a stable long-term investment?

ExxonMobil operates in over 56 countries. Its upstream business extracts oil and natural gas, its midstream business operates more than 16,000 miles of pipelines across North America, and its downstream refining business manufactures and markets petroleum products.

High oil prices are beneficial for its upstream business, as they drive revenue to outpace expenses, but they can hurt its downstream business as input costs rise. Its midstream business generates stable profits regardless of fluctuating oil prices, as it simply charges “tolls” for transporting those resources through its pipelines and infrastructure.

Over the long term, that diversification makes ExxonMobil a more stable investment than stand-alone upstream and downstream companies. That’s why it’s raised its dividends annually for 43 consecutive years, while other oil companies periodically paused their payouts. It currently pays an attractive forward yield of 2.7%.

What will happen to ExxonMobil over the next five years?

ExxonMobil is partly exposed to the Iran conflict, since it still gets about a fifth of its oil from the Middle East. However, it actually gets most of its oil and gas from the United States — where it operates its largest oil fields in the Permian Basin and offshore rigs across the Gulf of Mexico.

To reduce its exposure to the Middle East, it’s been expanding in Guyana, one of the world’s fastest-growing oil regions; importing oil sands from Canada, and investing in other higher-growth markets across Latin America, Asia, and Africa. It’s also exporting more liquefied natural gas (LNG) and expanding its higher-growth carbon capture and storage business. All of those irons in the fire should drive ExxonMobil’s steady earnings growth over the next five years.

From 2025 to 2028, analysts expect its EPS to grow at a 19% CAGR. If it matches those estimates, grows its EPS at a 15% CAGR through 2031, and still trades at 14 times its current year’s earnings by the final year, its stock could rise about 60% over the next five years. So if you’re looking for a simple energy play that can consistently beat the S&P 500’s average annual return of 10%, ExxonMobil checks all the right boxes.