This is another large-cap company with a stock that offers strong value for investors. ConocoPhillips (NYSE: COP) explores for, produces, transports and markets crude oil, bitumen, natural gas, liquefied natural gas and natural gas liquids (NGLs) worldwide.
Conoco’s portfolio includes resource-rich North American tight oil and oil sands assets; lower-risk legacy assets in North America, Europe, Asia and Australia; various international developments; and an inventory of conventional and unconventional exploration prospects.
Many Wall Street analysts feel Conoco can accelerate growth from a reloaded portfolio depth in the Bakken and Eagle Ford, with visibility on future growth from a sizable position in the Permian. Goldman Sachs is very positive:
We see four key drivers of an attractive view on COP including:
(1) Leverage to an oil price recovery, particularly given the stock’s recent dislocation versus Brent prices, to which it has historically been highly correlated.
(2) Robust free cash flow generation, representing attractive capital returns potential.
(3) Asset quality accretion via the recently completed Concho transaction.
(4) Attractive valuation following underperformance versus peers. While we continue to get pushback around federal land exposure, we see positive catalyst opportunities via the company’s March guidance update, a potential buyback announcement, and an oil demand recovery.
Investors in ConocoPhillips stock receive a 3.18% dividend. Goldman Sachs has a $66 price target, and the consensus target is $62.73. Shares last closed at $54.02.
The energy giant finally has been removed from the penalty box on Wall Street and offers investors an incredible entry point. Exxon Mobil Corp. (NYSE: XOM) is the world’s largest international integrated oil and gas company. It explores for and produces crude oil and natural gas in the United States, Canada, South America, Europe, Africa and elsewhere.
Exxon also manufactures and markets commodity petrochemicals, including olefins, aromatics, polyethylene and polypropylene plastics, and specialty products, and it transports and sells crude oil, natural gas and petroleum products.
The analysts said this:
Our positive view is predicated on leverage to positive macro tailwinds around higher oil prices and improving refining/chemicals margins, continued progress on cost reductions, as well as a commitment to capital discipline that we believe will drive lower break evens versus recent history. While Exxon has outperformed peers year-to-date, we continue to see potential positive catalysts in a positive consensus revision cycle as well as the company’s upcoming March analyst day.
The dividend yield is 6.23%, and it probably will continue to be defended. The $65 Goldman Sachs price target is higher than the $60.37 consensus target. The stock ended last week at $57.39 a share.
These are all solid ways for investors to play the upswing in oil and an improving 2021 economy. Plus, as three integrated majors, they are stellar stocks for investors looking for a degree of safety and income, as well as exposure to a sector that still has good upside potential.