9 Green Days In A Row: Imperial Oil Stock Is Up 9.5%

A multi-day run has pushed the stock higher, but the underlying business metrics present a more complicated picture for investors to weigh.

A nine-day run higher in Imperial Oil (IMO) stock has added about $5.8 billion to the company's market value. The stock has now moved higher for 9 consecutive trading days, producing a cumulative gain of 9.5% and bringing its total market capitalization to about $66 billion.

For anyone holding the stock, this recent performance has been strong, especially as the wider market has pulled back. The move has pushed the share price to about $136.86.

The Streak Next To The S&P 500

Here is how IMO stock stacks up against the S&P 500 over the streak and the periods around it:

Is This Rally Backed By The Business?

The evidence is mixed. The run appears to be specific to the stock, as the S&P 500 returned -1.5% over the same 9 trading days. On valuation, Imperial Oil trades at a price-to-earnings multiple of 15.9, below the S&P 500 median of 23.2.

However, its recent growth and profitability metrics trail the median S&P 500 company. Revenue over the last twelve months grew 7.0%, versus a median of 8.4% for the index, while its 3-year average annual revenue growth is -0.2%. The company's operating margin over the last twelve months is 10.4%, compared to an S&P 500 median of 18.4%.

What's The Disciplined Takeaway?

A streak is information, not an instruction. It tells you a stock has momentum and has captured the market's attention, but it doesn't say whether the price is fair or if the run will continue. The disciplined move is always to check the business against the price.

This recent 9.5% gain is part of a +2.8% return over the trailing three months, but follows a much stronger +69.4% return over the trailing twelve months. The numbers here provide a starting point to weigh the company's fundamentals against its recent and longer-term performance.

A run like this is worth respecting, and worth testing: the momentum that lasts is usually the kind management itself is underwriting. Our Guidance Momentum screen tracks the stocks whose companies just raised their own forward numbers.

And for anyone who would rather back the theme than one company's story, an energy ETF like XLE holds the sector rather than this one name. It is still a concentrated bet on that one theme, though, which is exactly the gap the portfolio below closes.

One Hot Stock Is A Story. Thirty Sound Ones Are A Strategy

A streak like this earns a place on your watchlist, and it also earns a question: how much of your outcome do you want depending on one company keeping this up?

The Trefis High Quality (HQ) Portfolio answers it with breadth: roughly 30 businesses picked for consistent cash generation, strong margins, and balance-sheet strength, sized and rebalanced by rules. It has a track record of outpacing a benchmark that combines the three major indices - the S&P 500, S&P Mid-cap, and Russell 2000. Follow the story; invest in the strategy.