8. ConocoPhillips (NYSE:COP)
52 Week Range: $101.30 – $135.18
Current Share Price: $104.72
Number of Hedge Fund Holders: 72
Market Capitalization as of September 30: $121.82 Billion
ConocoPhillips (NYSE:COP) is one of the best blue chip stocks to buy at 52-week lows. A lower interest rate environment spurs capital investment, lowers unemployment, and helps fuel economic growth, which should trigger higher demand for the oil and gas it deals in.
Even with oil prices plunging to lows of $70 a barrel, ConocoPhillips (NYSE:COP) remains well positioned to achieve annualized free cash flow of between $120 million and $130 million in 2024 as long as oil prices average between $60 and $90 a barrel.
Similarly, ConocoPhillips (NYSE:COP) has set out to strengthen its competitive edge and prospects in the oil and gas business with a deal to acquire Marathon Oil. The combined company should produce much free cash flow so that it will be able to increase dividends, buy back stock, and accelerate growth.
The acquisition promises significant synergies with ConocoPhillips (NYSE:COP)’s current asset portfolio. The management has stated that they are optimistic that the deal will be closed by the end of 2024 and that synergies will be achieved by the end of 2025. The $500 million synergy target may have benefits the market hasn’t yet fully acknowledged.
ConocoPhillips (NYSE:COP) would become a stronger company with no impact on its balance sheet or dilution to shareholders in the event of success. Although it’s a big ask, ConocoPhillips recently gave its shareholders a huge capital return. ConocoPhillips intends to pay out at least $9 billion in dividends and buybacks to shareholders in 2024 alone.
ConocoPhillips (NYSE:COP)’s capital allocation strategy demonstrates the company’s dedication to generating shareholder value. Because of its strong balance sheet, the company has a competitive edge that allows it to increase shareholder returns during different cycles in commodity prices. While trading at a P/E of 10, the stock yields 2.98% on dividends.
As of the end of June, Insider Monkey’s database shows that 72 hedge funds are optimistic about ConocoPhillips (NYSE:COP), an increase from 62 in the previous quarter. Eagle Capital Management emerged as the top stakeholder in the second quarter, holding over 14.52 million shares.
Here is what Invesco Growth and Income Fund said about ConocoPhillips (NYSE:COP) in its Q2 2024 investor letter:
“Stock selection in the industrials and health care sectors detracted from relative performance during the quarter. Selection and an underweight in consumer staples also hurt relative return as the sector was one of just two index sectors with a positive return for the quarter. ConocoPhillips (NYSE: C.O.P.): The company announced its acquisition of Marathon Oil in May. The deal is expected to increase earnings and will increase the scale of Conoco’s production assets. However, the stock traded lower on the news.”
