2. ConocoPhillips (NYSE:COP)
Number of Hedge Fund Holders: 72
Houston, Texas, based ConocoPhillips (NYSE:COP) is a leading global energy company specializing in hydrocarbon exploration and production. The company explores for, produces, transports, and markets crude oil, bitumen, natural gas, liquefied natural gas (LNG), and natural gas liquids.
ConocoPhillips (NYSE:COP) stands out as one of the best LNG stocks to buy now owing to its impressive track record in timely acquisitions that strengthen its edge in the energy sector. In 2023, ConocoPhillips expanded its LNG portfolio by securing regasification capacity at the Gate LNG terminal in the Netherlands and finalizing a decision for 5 MTPA of LNG offtake and 30% equity in Sempra’s Port Arthur LNG Phase 1 project.
Additionally, they signed offtake agreements at Mexico Pacific’s Saguaro Energía LNG and Energia Costa Azul export facility. These efforts, along with their 60-year history in LNG technology, position ConocoPhillips as a key player in the global energy transition, leveraging natural gas to reduce greenhouse gas emissions and support energy security.
It also completed the acquisition of Concho Resources when the overall sector was in a downturn, creating a combined resource base of approximately 23 billion barrels of oil equivalent. Nevertheless, the company suffered a major blow on its plan to acquire Marathon Oil, resulting in a significant pullback in the stock price. The acquisition was expected to expand the company’s footprint into new regions, including Eagle Ford, Bakken, Delaware, and Permian basins. It was also expected to result in $500 million in cost savings.
ConocoPhillips (NYSE:COP)’s acquisition strategy focuses on assets that are cost-effective to produce, allowing it to make a profit even when the prices of oil and gas are low. It strategizes its operations around a target price of $60 per barrel.
This structured approach has resulted in the company’s sustained financial stability. It has consistently maintained a financial profile characterized by low long-term debt and strong debt ratios to capital and financial debt to equity. Unlike many other exploration and production companies that took on more debt during the 2020 recession, ConocoPhillips managed to preserve its financial health through its disciplined approach.
ConocoPhillips (NYSE:COP) delivered solid Q2 2024 results with adjusted earnings of $2.3 billion or $1.98 a share. Generated cash provided by operating activities totaled $4.9 billion, and cash from operations (CFO) totaled $5.1 billion.
Backed by a solid balance sheet, the company has consistently rewarded its shareholders, affirming its ability to generate shareholder value. It distributes 40% of its cash flow to shareholders through dividends and buybacks.
ConocoPhillips (NYSE:COP)’s dividend is $0.58 a share with a 1.8% dividend yield. ConocoPhillips has also announced a 34% increase in ordinary dividends as it also plans to return $9 billion of capital by year-end.
By the end of June, 72 hedge funds were bullish on ConocoPhillips (NYSE:COP), up from 62 in the previous quarter, based on Insider Monkey’s database. Eagle Capital Management stood out as the largest stakeholder in the second quarter, with over 14.52 million shares.
Here is what Invesco Distributors, Inc. said about ConocoPhillips (NYSE:COP) in its Q2 2024 investor letter:
“Stock selection in the industrials and health care sectors detracted from relative performance during the quarter. Selection and an underweight in consumer staples also hurt relative return as the sector was one of just two index sectors with a positive return for the quarter. ConocoPhillips (NYSE:COP): The company announced its acquisition of Marathon Oil in May. The deal is expected to increase earnings and will increase the scale of Conoco’s production assets. However, the stock traded lower on the news.”
