Ahead of Exxon Mobil’s (NYSE:XOM) quarterly earnings release on Oct. 28, XOM stock is on the rise. Shares have hit new all-time highs, as investors expect another earnings beat for the integrated oil and company.

But while XOM has continued to move higher, producing further profits for existing shareholders, if you have yet to add it to your portfolio, I can see why you may be a bit skittish about doing so.

Since spiking on the latest OPEC news earlier this month, recession fears have pushed crude oil prices back to the low-$80s per barrel. This may suggest lower prices, and a lower stock price, lie ahead for Exxon Mobil.

However, despite this pullback, the current forecast for oil prices points to them staying at elevated levels. Add in this stock’s long-term positives, and it’s clear that any concern about the stock “topping out” is an overreaction.

Why XOM Stock Isn’t Running Out of Runway

Up around 67% since the start of the year, Exxon Mobil shares have delivered stellar capital appreciation for investors. Add in $2.64 per share in dividends year-to-date, and this stock has delivered a total return nearing 72%.

It’s a stretch to say that XOM stock has the ability to make another high double-digit move within a similar timeframe. It isn’t, however, far-fetched to assume that the stock will deliver subpar returns for investors buying it today. There’s still enough in play to sustain (and grow) XOM’s valuation, though.

Downward drivers for oil prices, such as a recession, or President Biden’s plans to release more oil from the U.S. Strategic Petroleum Reserve, are likely to be outweighed by OPEC’s forthcoming production cuts. This is likely to keep oil at or above current levels. In turn, enabling Exxon Mobil to maintain its current level of earnings.

From there, shares could move higher for several reasons. The market could decide to re-rate the stock, as the risk of oil falling back to prior-year levels keeps dropping. An increase to the company’s dividend (current forward yield of 3.3%) may also help to propel shares higher.

A Fossil Fuels Giant, But Not a Dinosaur

Besides oil price uncertainties, there’s another factor that’s perhaps holding back XOM stock: concerns that fossil fuels companies are dinosaurs. That is, this company and its peers face an inevitable extinction, due to the rise of renewable energy.

Yet in contrast to the fears of investors, and perhaps to the hopes of the company’s environmental critics, as a Barron’s commentator recently argued, Exxon Mobil actually has a bright future ahead of it.

The sharp comeback in crude oil prices has given this company the ability to replenish its cash position, for use primarily to maintain/grow its dividend, and make big share repurchases.

ExxonMobil is also putting the billions currently flowing into its coffers into hydrogen and carbon capture projects. As I’ve argued previously, the U.S. Inflation Reduction Act could provide a windfall for the company’s carbon capture endeavors.

This isn’t merely a PR move. The oil giant is pursuing “green” opportunities that will offer an adequate return on investment. According to one analyst quoted in the Barron’s piece (Morgan Stanley’s Devin McDermott), XOM’s renewable projects could generate a 15% return on capital, and contribute billions to its bottom line by the 2030s.

Bottom Line on XOM Stock

Even with the stock’s tremendous run-up in 2022, there’s still room for Exxon Mobil shares to keep climbing, as conditions remain very favorable to the oil and gas industry.

Coupled with its steady dividend, XOM stands to continue producing solid returns in the foreseeable future. The company is also making the right moves when it comes to adapting to the emerging “new normal” in energy.

Investing billions into new energy projects, in particular carbon capture, what at first seemed like a threat could end up being a tremendous opportunity for Exxon Mobil and its shareholders. It’s also worth noting that a continued move into new energy could also help to expand this oil company’s earnings multiple over time.

Alongside other blue-chips that make for high-quality core portfolio holdings, be sure to include XOM stock as well.

XOM stock earns an A rating in Portfolio Grader.

On the date of publication, Louis Navellier had a long position in XOM. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.

InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.