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Wednesday, September 20, 2006

GM Outperforms Exxon: Has Big Oil Had Its Day?


Over both the last three months and the last six months GM’s stock has done better than Exxon’s. Who says the markets cannot see ahead? Since April, GM’s stock is up 40% and Exxon’s is flat.

Over the last three and six month periods, Continental Airlines stock has done better than Exxon as well.

It was supposed to be the other way around. With high oil prices, companies like Exxon, Conoco, and Chevron were supposed to be the market winners, and the big consumers of oil were supposed to be damaged irreparably.

Of course, oil prices hit $80 in early July, and now a barrel trades around $62. Although the tables have not been turned all the way, the process has begun.

Since announcing record profits, Exxon’s stock has dropped from over $71 to about $65. If the market’s take on the stock price of car companies, airlines, and big oil are right, Exxon could go much lower. Of course the charts for companies like Chevron don’t look very different. The stock peaked in July above $69 and now trades at below $62.

The case is not perfect. Southwest Airline has not performed as well as Exxon over the last three or six months. But, the chart shows that the two stocks are close. And, the Toyota stock is within a few percentage points of Exxon over the three and six month measurement periods as well.

What does it tell Wall St.? Maybe nothing. Or, the smart money is moving out of one sector and into a couple of others.

Douglas A. McIntyre can be reached at He does not own securities in companies that he writes about.

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