Top 10 Stocks to Buy According to Eagle Capital Management

2. ConocoPhillips (NYSE:COP)

Number of Hedge Fund Holders as of Q4: 86

Eagle Capital Management’s Equity Stake: $1.95 Billion 

ConocoPhillips (NYSE:COP) reported Q4 2024 earnings of $2.3 billion, or $1.90 per share, surpassing analyst estimates but falling significantly short of $3.0 billion, or $2.52 per share, reported in the same period the previous year. Full-year earnings also declined from $11.0 billion in 2023 to $9.2 billion in 2024. However, production levels exceeded guidance, driven by strong performance from Lower 48 operations, which saw a 5% year-over-year increase. The recent Marathon Oil acquisition by ConocoPhillips is yielding benefits, with the company forecasting a capital expenditure of under $13 billion for 2025, down from the combined $13.5 billion in 2024. Despite the positive forecast, analysts downgraded COP from a Strong Buy to an Outperform rating, while also reducing the stock’s price target from $157 to $124.

Despite the downgrade, analysts still consider ConocoPhillips (NYSE:COP) one of the most efficiently managed exploration and production companies, with an attractive valuation based on discounted cash flow and multiple analysis. The change in rating reflects the lack of a near-term growth catalyst rather than concerns over the company’s long-term fundamentals. While the company’s global asset portfolio remains strong, the absence of immediate drivers for significant stock appreciation has led to a more cautious stance.

A pure-play oil and natural gas producer, ConocoPhillips (NYSE:COP) has had a significant surge in production for Q4 2024, reaching 2.18 million barrels of oil equivalent per day, largely driven by its $22.5 billion acquisition of Marathon Oil. This consolidation reflects a broader industry trend toward efficiency, but despite expansion, the company’s stock has declined 10% over the past two years, highlighting a disconnect between growth and shareholder returns. With Brent crude prices projected to drop to $74 per barrel and supply expected to outpace demand, market volatility remains a key concern. Despite uncertain conditions, ConocoPhillips maintains efficiency with a production cost of $19.18 per barrel, ensuring profitability and strong dividends.

Diamond Hill Large Cap Strategy stated the following regarding ConocoPhillips (NYSE:COP) in its Q2 2024 investor letter:

“Other bottom contributors in Q2 included CarMax, Target Corporation and ConocoPhillips (NYSE:COP). Shares of oil and gas exploration and production company ConocoPhillips declined against a backdrop of lower oil prices in Q2, as well as concerns about the expensive though strategically sound acquisition of Marathon Oil.”