JBL: Size Counts

American giants Wal-Mart and Exxon Mobil are buys. Plus, rethinking Suncor and Dell.
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The two biggest companies in America have plenty of detractors, from members of Congress to environmentalists to just plain old people who hate anyone who succeeds. I believe both are buys right now.

Wal-Mart

(WMT) - Get Report

is a company I have

profiled before, a company in which I still own shares. Wal-Mart is a great buy right here and when it gets its bank charter, and I believe it will, it will be an even greater stock to own.

The company that recently unseated Wal-Mart as the biggest company in America is

Exxon Mobil

(XOM) - Get Report

. Exxon Mobil is a cash cow that produced a record amount of profits, $36.1 billion, last year on over $330 billion in revenue. You would think this American icon would be lauded by everyone; not so. Congress recently had one of the biggest dog-and-pony shows in history to try to vilify the CEOs of the major oil companies. To be totally apolitical here, both sides of the aisles displayed the same lack of knowledge about business.

When questioned about why Exxon Mobil doesn't invest more in alternative energy technology, CEO Tillerson responded unapologetically: "We are not in those businesses." Needless to say that a lack of energy policy by these congressmen is one cause of oil prices being high; this will continue to benefit Exxon Mobil, which -- unlike our Congress -- just simply runs a great company. Exxon Mobil has $30 billion in cash that they plan to use for share buybacks and dividends, $20 billion in share buybacks and $8 billion in dividends. Exxon Mobil has the best exploration and production in the business; they have replaced over 100% of what it has produced for the last 12 years.

Exxon Mobil does have business in some volatile places like Nigeria, Angola and Venezuela. In fact, Exxon Mobil was the only oil company to stand up to Hugo Chavez in Venezuela, when Chavez unexpectedly raised royalties on oil profits. Exxon Mobil stands a chance to lose its business in Venezuela, and so far the Congress has not chosen to come to the aid of an American business. In addition, Exxon Mobil faces a potential windfall profits tax; however, I don't think that will ever pass.

Exxon Mobil also faces a ton of protests over drilling in the Arctic National Wildlife Refuge. On this issue, I am with Dennis Miller in that a moose never hijacked a plane, and I think most Americans will agree, especially with oil over $75 a barrel. Exxon Mobil is in position to get first chance at ANWAR if it is fully opened to oil and natural gas production.

The numbers for Exxon Mobil are something out of a sports page. Exxon Mobil has almost $50 billion in operating cash flow, 33% return on equity (ROE), and a share-buyback program that would reduce shares outstanding by more than 5%.

Exxon Mobil has a slew of critics, as most sucessful big businesses do. However, for an investor, this is a great core holding. I own and recommend buying shares of Exxon Mobil.

One of the few other oil companies that has increased its reserves is

Suncor Energy

(SU) - Get Report

. I

recommended Suncor in mid-November when it was trading around $54; it has since had a 64% upside to $88.78 as of Friday's close. I felt recently that Suncor was getting close to full value, but I am changing my mind. Due to a new lease, Suncor has increased its recoverable oil 27% to 14 billion barrels from 11 billion.

With new technology that is helping reduce the cost of extracting oil from the bitumen (the heaviest, thickest form of petroleum) and the fact that I believe that Suncor will convert to royalty trust status to minimize its tax liabilities, I believe that Suncor is a compelling buy here at these levels and a great core holding as well.

Going With the Hurd

I was wrong about

Dell

(DELL) - Get Report

. I recommended it and then had to

eat crow; even worse, I took a loss in selling it. I believed that Dell would continue its domination and gaining of market share. The exact opposite has happened.

Hewlett-Packard

(HPQ) - Get Report

under new CEO Mark Hurd has managed to take market share from Dell.

Dell's share of computer shipments fell from 18.6% to 18.1% in the first quarter compared with a year ago, according to IDC. That's the first time in Dell's history that there has been no growth, and first time since 1996 that growth was below 5%.

H-P, meanwhile, saw its market share grow from 15.1% to 16.4%. Citigroup actually put a rare sell rating on Dell. With both stocks trading at a 14 multiple, I believe an investor has to go with H-P.

Hurd is cutting 10% of H-P's workforce and has nixed three levels of management that were between him and customers. While I am still a fan of Michael Dell, Hurd is a born salesman running a company that has to sell things. H-P is clearly winning the war.

H-P has more than $9 billion in cash and just around $500 million in debt. H-P has almost $5 billion in operating cash flow, with a whopping 67% ROE.

I recommend buying H-P and staying away from Dell.

P.S.:

I am in England this week and I thought the celebration for me was great until I realized it was for the Queen's birthday. So Happy Birthday, and Long Live the Queen.

Remember, being poor is bad, staying that way is stupid.

At the time of publication Layfield was long Wal-Mart and Exxon Mobil although holdings can change at any time. A former All-American offensive lineman at Abilene Christian University, John Layfield played professional football for the then-Los Angeles Raiders and later in the World League. After wrestling in Japan, Mexico and Europe, Layfield arrived in the WWE in the mid-1990's. A former WWE champion, JBL was a featured wrester at WrestleMania 21 and can also be seen on

Friday Night SmackDown!

on UPN. Outside of the ring, JBL is a self-taught investor who was recruited to write a personal finance book,

Have More Money Now

, which was released in the summer of 2003. He has appeared on finance shows on CNN and Fox News Network. He is co-chairman of the Smackdown Your Vote! Campaign and he has joined both the USO and Armed Forces Entertainment (AFE) for tours through Iraq, Afghanistan and other Middle East countries. He regularly visits the Walter Reed Army Medical Center and the Bethesda naval hospital to meet with wounded troops.