Yahoo Finance Here's Why Hold Strategy is Apt for ConocoPhillips (COP) Now
ConocoPhillips COP is a leading upstream energy firm in the world on the basis of production and reserves. Currently, the firm carries a Zacks Rank #3 (Hold).
Factors Working in Favor
West Texas Intermediate crude price, trading at more than $70 per barrel, is extremely favorable for upstream activities. Being a leading exploration and production company globally, ConocoPhillips is well-positioned to capitalize on handsome crude prices. It has a strong footprint in prolific oil-rich plays like the Permian Basin, Eagle Ford and Bakken, brightening the company’s production outlook. For 2023, ConocoPhillips expects production at 1.78 to 1.80 million barrels of oil equivalent per day (MMBoE/D), suggesting an improvement from 1.74 MMBoE/D for 2022.
COP is strongly focused on returning capital to shareholders. Last year, the upstream firm returned as high as $15 billion to shareholders. The company employed a three-tier framework that comprised $5.7 billion in cash distributions through the ordinary dividend and variable return of cash route, while the remaining $9.3 billion was distributed through share repurchases.
ConocoPhillips is currently paying a dividend yield of 2.03%, higher than 1.98% yield of the composite stocks belonging to the industry.
Risks
Being an upstream energy player, the overall operations of the company are strongly exposed to volatility in oil and natural gas prices. Moreover, increasing production and operating expenses are hurting its bottom line.
Stocks to Consider
Better-ranked players in the energy space include Murphy USA Inc. MUSA, Sunoco LP SUN and Dril-Quip, Inc. DRQ. While Murphy USA and Dril-Quip carry a Zacks Rank #2 (Buy), Sunoco sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Murphy USA is a leading retailer of gasoline. MUSA has more than 1,700 stores and has witnessed upward earnings estimate revisions for 2023 earnings in the past seven days.
Sunoco, a distributor of motor fuel to approximately 10,000 convenience stores, has a stable business model. For this year, SUN has witnessed upward earnings estimate revisions in the past seven days.
Dril-Quip is a leading provider of highly engineered equipment, service and innovative technologies that are being employed in the energy sector.
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ConocoPhillips (COP) : Free Stock Analysis Report
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