5 Undervalued Energy Stocks to Buy According to Hedge Funds

2. ConocoPhillips (NYSE:COP)

Number of Hedge Fund Holders: 56

PE Ratio (as of March 7): 16.68

ConocoPhillips (NYSE:COP) is an energy company based in Houston, Texas. It deals in the production and sale of crude oil, bitumen, natural gas, liquefied natural gas (LNG), and natural gas liquids around the globe. 56 hedge funds were bullish on the firm’s shares in the fourth quarter, with aggregate stakes worth $1.55 billion. This is up from 49 hedge funds in the previous quarter holding positions worth $1.37 billion in ConocoPhillips (NYSE:COP).

On March 7, RBC Capital analyst Scott Hanold maintained an ‘Outperform’ rating on ConocoPhillips (NYSE:COP) shares, noting that the firm may be able to generate around $19 billion of free cash flow in 2022, of which a large portion should be returned to investors. He upped his firm’s price target on ConocoPhillips (NYSE:COP) to $120 from $110.

Reporting its Q4 earnings on February 3, ConocoPhillips (NYSE:COP) posted an EPS of $2.27, exceeding analysts’ estimates by $0.08. The firm’s revenue of $15.96 billion was up 163.89% year-on-year and beat analysts’ forecasts by $2.56 billion.

ClearBridge Investments, an investment firm, published its “Large Cap Value Strategy” Q3 2021 investor letter, where it talked about the prospects of ConocoPhillips (NYSE:COP). The fund said:

“We also seized the opportunity to add to our position in energy producer ConocoPhillips at what we considered an attractive valuation. The market rewarded this move late in the quarter after ConocoPhillips announced its purchase of Permian Basin assets from Shell, making the company the second-largest oil and gas producer in the contiguous U.S. We view this as a positive strategic transaction for a well-run, ESG-cognizant oil producer. With this and prior transactions, the company continues to press its cost advantage and is well-positioned to benefit from ongoing energy demand recovery to pre-pandemic levels.”