ConocoPhillips (NYSE) is a top undervalued energy stock, noted for its strategic $17.1 billion acquisition of Marathon Oil and strong financial projections, including a projected $18 billion in free cash flow next year. Analysts have set a price target of $165, with the stock currently trading at a P/E ratio of 13.04. Despite COP’s strong position, the potential for higher returns in AI stocks suggests a diversified investment approach might be beneficial.
ConocoPhillips (NYSE), a Texas-based global energy company founded in 1917, is involved in the exploration, production, transportation, and marketing of crude oil, bitumen, natural gas, liquefied natural gas, and natural gas liquids. The company’s current stock performance and strategic moves place it among the top undervalued energy stocks to buy according to analysts.
Key Metrics and Recent Developments:
- Average Analyst Estimates (May 28): $146.71
- Average Analyst Upside (May 28): 26.35%
- P/E Ratio: 13.04
In recent news, ConocoPhillips agreed to acquire Marathon Oil in an all-stock deal valued at $17.1 billion. This acquisition aims to enhance ConocoPhillips’ position in key U.S. shale basins, notably in Texas and North Dakota. The deal offers Marathon Oil shareholders 0.255 shares of ConocoPhillips for each share of Marathon Oil, representing a nearly 15% premium.
Truist Securities has raised its price target for ConocoPhillips to $165 from $160, maintaining a Buy rating, due to the expected strong performance post-acquisition. The company is projected to generate over $18 billion in free cash flow next year, resulting in a free cash flow yield exceeding 12%, the highest among major oil companies.
Hedge Fund Sentiment:
- Number of Hedge Funds Holding COP: 62 out of 919 tracked by Insider Monkey.
- Largest Stakeholder: Boykin Curry’s Eagle Capital Management, with a $1.8 billion investment.
ConocoPhillips ranks 3rd among the 9 Best Energy Dividend Stocks to Buy According to Hedge Funds and 3rd on our list of the best undervalued energy stocks to buy according to analysts.
Conclusion: ConocoPhillips stands out as a strong candidate among undervalued energy stocks due to its strategic acquisitions, robust financial projections, and favorable hedge fund sentiment. However, while it ranks highly, there is a belief that AI stocks might offer higher returns within a shorter timeframe, suggesting a diversified investment approach may be beneficial.
