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By Christine Benz | 04-07-2010 08:00 AM

A Blue Chip the Rally Left Behind

Day 3: This major diversified energy firm offers some protection from inflation and an intriguing valuation, says Morningstar's Paul Larson.

Christine Benz: Hi, I'm Christine Benz for Morningstar.com. You have until April 15 to fund an IRA for the 2009 tax year, so all this week I'm talking to some of Morningstar's experts to get their best idea for investments to put within an IRA. Today I'm joined here by Paul Larson. Paul is an equity strategist and also editor of Morningstar StockInvestor. Paul, thanks for being here.

Paul Larson: Thanks for having me.

Benz: Paul, we've recently seen in the past couple of weeks a lot of stocks drop out of 4- and 5-star territory. The analysts think the universe is pretty fairly valued overall. But you've brought us a stock pick that you think still has some pretty good upside potential from here.

Larson: You're absolutely right. The universe of wide-moat, 5-star stocks has dramatically thinned in recent months. But there is one wide-moat, 5-star stock that I think is still attractive, and that is the world's largest oil company, ExxonMobil.

Benz: Tell us why you like it, and why you think there still may be some upside potential.

Larson: In the oil industry, when you look at returns on invested capital, overall profitability, scale is definitely correlated to that.

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