We recently published a list of 7 Best Natural Resources Stocks to Invest in According to Hedge Funds. In this article, we are going to take a look at where ConocoPhillips (NYSE:COP) stands against other best natural resources stocks to invest in according to hedge funds.
Natural resource stocks are an important part of the global economy, representing mining, energy, and agricultural companies. These industries are the foundation of numerous sectors, providing necessary materials for infrastructure, technology, and transportation. Despite the growing emphasis on renewable energy, fossil fuels, metals, and agricultural resources remain essential for modern economies. According to The Business Research Company, the global mineral market is expected to grow at a compound annual growth rate (CAGR) of 6.2%. This growth emphasizes the long-term importance of natural resources.
The top 40 global mining companies generated a record $943 billion in revenue in 2022, but this figure declined to approximately $792 billion in 2024, owing primarily to fluctuating commodity prices. Despite this, Deloitte reported that between January and mid-November 2024, the oil and gas industry paid out $213 billion in dividends and $136 billion in buybacks, demonstrating the sector’s strong cash returns.
However, the natural resource sector has been experiencing a surge in market activity, driven mainly by commodity price movements and global demand. Precious metals, in particular, have proven to be strong assets. Over the past year, the market’s Gold Index returned 44.59%, while the Silver Index returned 42.01%. These gains have resulted from rising investor interest in safe-haven assets due to inflationary pressures and escalating global trade tensions. As inflation erodes the value of fiat currencies, investors are increasingly turning to gold and silver as safe-haven assets during times of uncertainty.
Moreover, technological advancements such as Floating Liquefied Natural Gas (FLNG) platforms are increasing the efficiency of offshore gas production while reducing reliance on onshore infrastructure. According to Business Wire, global liquefied natural gas (LNG) liquefaction capacity is expected to double by 2028 from 473 million tons per annum (MTPA) in 2023 to 968 MTPA as expansion projects continue. This projected increase indicates that even as the world strives for cleaner energy sources, natural gas will continue to play an important role in the global energy mix.
While efforts to reduce global carbon emissions continue, natural resource companies are adjusting by balancing traditional operations with sustainability initiatives. For example, the UAE has pledged $30 billion to a global finance fund while its banking sector aims to invest $270 billion in green finance by 2030 to support renewable energy growth. Simultaneously, Middle Eastern sovereign wealth funds, which manage $3.8 trillion in assets, are increasingly allocating capital to green investments. This shift has not only reduced fiscal breakeven burdens for energy companies but has also increased regional economic stability.
The chemicals industry is also shifting to sustainability, with renewable production of key chemicals such as ammonia, methanol, and olefins expected to cost between $440 billion and $1 trillion by 2040. According to PwC, this figure could rise to between $1.5 trillion and $3.3 trillion by 2050.
Similarly, innovative zinc recycling techniques have produced a 95% recovery rate from steel mill waste, converting industrial waste into useful recyclable components. Nanotechnology breakthroughs are increasing recovery efficiency in gold mining while reducing environmental impact. These technological advancements demonstrate the growing significance of technology in maximizing resource use and cutting waste, which propels the natural resource industry forward.
Methodology
To compile our list of the 7 Best Natural Resources Stocks to Invest in According to Hedge Funds, we first conducted extensive research to identify companies with significant exposure to the natural resource sector. We defined exposure in terms of mining, energy production, agriculture, or the extraction and processing of key commodities. We then analyzed these companies based on their hedge fund holdings and ranked them based on the number of hedge fund investors who held stakes in these companies, as per the Q4 2024 data from Insider Monkey’s database.
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).
An underground network of pipelines transporting oil through an expansive terrain.
ConocoPhillips (NYSE:COP)
Number of Hedge Fund Holders: 85
ConocoPhillips (NYSE:COP) is an independent exploration and production company that specializes in natural gas, liquefied natural gas (LNG), and crude oil and has established a strong presence in the Asia-Pacific, Europe, Canada, and the U.S. shale basins. The company maintains a strong presence in LNG markets due to key contracts and strategic assets that foster long-term expansion.
ConocoPhillips (NYSE:COP) produced 1.84 million barrels of oil equivalent per day (MMBOED) in 2024, marking a 3% increase from the previous year. This growth was primarily driven by a notable increase in LNG volumes and strong performance from U.S. shale operations. The company generated $21.3 billion in operating cash flow, driven by its efforts to maintain capital discipline and capitalize on rising commodity prices. However, because of increased operating costs and acquisition-related expenses that affected overall profitability, net income decreased to $11.2 billion from $18.7 billion in 2023.
ConocoPhillips (NYSE:COP) made great progress in growing its LNG strategy despite the profitability issues. The company established a long-term LNG sales agreement in Asia and obtained a long-term regasification agreement for Belgium’s Zeebrugge LNG terminal in 2024. In addition, the company has significant stakes in LNG production plants in Australia and Qatar. Furthermore, the company secured a long-term capacity agreement for the Zeebrugge terminal, operated by Fluxys, thereby solidifying its LNG business as a crucial area of expansion.
ConocoPhillips (NYSE:COP) announced $1.3 billion in asset divestitures as part of its plan to simplify its holdings and strengthen its financial position. The $735 million sale of the company’s interests in the Ursa and Europa Fields to Shell, which is anticipated to close by Q2 2025, came after the company’s $22.5 billion acquisition of Marathon Oil. The company also divested $600 million worth of non-core Lower 48 assets. These steps will help strengthen the company’s balance sheet and optimize its portfolio for future growth as part of its larger asset disposition target of $2 billion.
Going forward, ConocoPhillips (NYSE:COP) is committed to maintaining its current growth trajectory. With a continued focus on long-cycle projects and high-return shale assets, the company anticipates that production will range between 2.34 million and 2.38 million barrels of oil equivalent per day in 2025. To balance investments and guarantee long-term value creation, ConocoPhillips has set a target shareholder return of $10 billion. As it continues its trajectory of steady growth and innovation, the company is well-positioned to prosper in a dynamic and frequently volatile market environment.
Overall, COP ranks 3rd on our list of best natural resources stocks to invest in according to hedge funds. 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 that 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.
