We recently published a list of 12 Best Energy Stocks to Buy According to Billionaire Ken Fisher. In this article, we are going to take a look at where ConocoPhillips (NYSE:COP) stands against other best energy stocks to buy according to billionaire Ken Fisher.
Ken Fisher, an American billionaire investor, author, and financial analyst, founded and manages Fisher Asset Management. He is one of the world’s most renowned investment managers, known for his contrarian style and strong confidence in capitalism. With an estimated net worth of more than $11.2 billion, he is also one of the wealthiest billionaires in the world. Fisher launched his fund in 1979, which has since developed into a global investment powerhouse that manages over $252 billion in securities. That said, Fisher’s influence extends beyond asset management to include financial journalism and publishing. He penned a Forbes magazine column for more than three decades, the longest in the magazine’s history, and authored eleven books, four of which were New York Times bestsellers.
Notably, Fisher pioneered the use of the Price-to-Sales Ratio in the early 1980s, demonstrating its use as a tool for financial investment research. His hedge fund uses this technique to manage small-capitalization portfolios for institutional investors across the globe. Fisher Asset Management’s concept is founded on Ken Fisher’s understanding of the operation of free markets. The billionaire investor believes that supply and demand are the only factors influencing securities prices and that capital markets are generally effective discounters of well-known information.
Energy Sector Outlook
Energy companies were off to a solid start this year, outperforming the S&P 500 for the first time in years, driven by gains in natural gas equities as prices recover from record lows. The sector’s advances indicate a notable turnaround for the industry. Energy stocks fell 1.3% in 2023 and only gained 5.7% last year, while the S&P 500’s bull run continued, rising over 50% over the past two years. According to most analysts, the sector’s excellent year has been fueled by a comeback in oil and gas prices with the beginning of the cold weather in the United States, resulting in significant gains for natural gas equities.
As the energy sector evolves, investors must balance the stability of traditional fossil fuels with the growing potential of renewables and modern nuclear technologies. In such a market dynamic, oil and gas firms have placed importance on high-return investments and increased production efficiency, which has led to noteworthy financial performance and investor confidence. According to Deloitte, industry capital expenditures have risen 53% in the last four years, while net profit has increased by approximately 16%. Despite ongoing uncertainties over OPEC+ production cutbacks and potential interruptions to energy commerce, the industry’s financial discipline, customer-focused initiatives, and technical advances position it for a successful 2025.
Ken Fisher is also among those who feel that the energy sector is vulnerable to fossil fuel prices and will remain so for the foreseeable future. Aside from some short-term volatility on occasion, the billionaire predicts oil prices will stay steady this year as increased supply is countered by stronger global economic development. Speaking on this, Ken Fisher said the following:
But the fact of the matter is, there’s some things you can say, and a lot of people don’t want to hear them. We as a culture— the global culture—cannot get away from fossil fuel. Oil and natural gas are going to dominate what happens to energy in 2025.
We are not going to see, if you’re my age, in my lifetime, the ability to escape from fossil fuel. Maybe someday we will. But the reality is there’s an abundant amount of fossil fuel to be recovered. The laws of physics go against most all the alternatives, one way or another. And even if you can ramp up the alternatives without huge government subsidy, which so far has not been able to be done, the amount by which you can do that doesn’t match the growth in demand for energy that lies ahead. And when I say lies ahead, that lying ahead is not a terribly different growth than what we’ve seen in the past. It is going to be bigger, but not that much bigger. One of the reasons that it becomes bigger, I want you to think this through, is because as economies in the Third World emerge and develop, they inherently consume more energy.
Our Methodology
For our list of the 12 best energy stocks to buy according to Ken Fisher, we looked through the billionaire’s Q4 2024 stock portfolio and ranked the following energy equities based on his hedge fund’s stake value in each holding. Additionally, we have mentioned the hedge fund sentiment around each stock, as of Q4 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
ConocoPhillips (NYSE:COP)
Fisher Asset Management’s Stake: $1.36 billion
Number of Hedge Fund Holders: 86
ConocoPhillips (NYSE:COP) is a global energy company headquartered in Texas that discovers, produces, transports, and trades crude oil, bitumen, natural gas, liquefied natural gas, and natural gas liquids.
ConocoPhillips (NYSE:COP) performed well in 2024 after completing the $22.5 billion acquisition of Marathon in late November, which added high-quality, low-cost supply inventories to the portfolio. During the year, the company returned $9.1 billion in capital to its shareholders, representing 45% of operational cash flow. In addition, ConocoPhillips has managed to raise its dividend for ten consecutive years and has declared its regular dividend of $0.78 per share for the first quarter of 2025, with intentions to return $10 billion to shareholders this year.
On March 12, JPMorgan reaffirmed its Overweight rating and $127 price target on ConocoPhillips (NYSE:COP). The firm’s analysts emphasized the company’s recent fourth-quarter performance, which exceeded expectations, as well as its long-term outlook for 2025, which includes a $10 billion capital return plan. JPMorgan analysts said that ConocoPhillips (NYSE:COP) has historically outperformed its E&P peers due to the portfolio’s defensive structure, which includes a solid balance sheet, modest sustaining capital expenditures, and a low-cost resource base. In that regard, the firm believes the company’s recent underperformance compared to its Large Cap E&P and US Major peers is due to market concerns about potential risks to the company’s 2025 return of capital target, as well as a narrow view of the company’s long-cycle investment program.
Overall, COP ranks 4th on our list of best energy stocks to buy according to billionaire Ken Fisher. While we acknowledge the potential of COP as an investment, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than COP but trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
