How the Niobara Formation Helps ConocoPhillips (COP) Stay on Top

Anadarko has also proposed the Front Range Pipeline, which will begin at Weld County, Colorado and end at Skellytown, Texas; a distance of 420 miles. This pipeline is expected to carry Colorado’s natural gas liquids to refineries in the Gulf Coast. Certainly, Anadarko knows where it is putting its money.

The price-to-book metric

The price-to-book ratio (P/B ratio) tells you if a company’s current market price is higher than its book value. A higher price-to-book ratio suggests that you are paying more than what the shares might have fetched if not for investors’ having very high expectations for the company.

Anadarko trades at $86 and its price to book ratio is 2.04. ConocoPhillips (NYSE:COP)’s price to book ratio is 1.53, which shows that people expect more from Anadarko than from ConocoPhillips. Noble’s price to book ratio is 2.40, which is higher than either Anadarko’s or ConocoPhillips’. Anadarko’s profitability is satisfactory and when we consider its operations in Mozambique, it is a good long-term investment, yet you will be paying marginally less to own ConocoPhillips.

What now?

All three stocks are potentially smart long-term investment choices but ConocoPhillips (NYSE:COP) seems more interesting at the moment because of the “Overweight” status attached to it. Moreover, with a target price of $80, it might prove to be a good investment choice, considering it trades at $62. With a profit margin of 13% and an operating margin of 24%, the company’s profitability is impressive too.

Jaiyant Cavale has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Jaiyant is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

The article How the Niobara Formation Helps ConocoPhillips Stay on Top originally appeared on Fool.com and is written by Jaiyant Cavale.

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