You got to know when to hold 'em, know when to fold 'em, know when to walk away and know when to run...
-Kenny Rogers, "The Gambler"
Our technical capabilities, asset quality and scale and financial strength are unmatched among independent exploration and production companies and uniquely position us to compete around the world.
Annual sales are around $60.5 billion. Its P/E is approximately 10.24 against an industry average of 14. It should be kept in mind that in April of 2012, ConocoPhillips spun off its refining, marketing and transportation businesses, most of the midstream segment, its chemicals segment as well as its power generation and various technology operations. The spin-off trades under the symbol PSX.
The following table shows its dividend history including ex-dividend dates for the past seven quarters.
ConocoPhillips' PEG Ratio is 2.30. Its earnings growth (2013/2012) is expected to be 2.65% against an industry average of 2.30%. It's earnings in 2012 were $5.37 and the consensus estimate for 2013 is $5.51. ConocoPhillips has beat the consensus earnings estimates in six out of the last seven quarters. There is a bias to the Buy/Strong Buy recommendations among analysts. Its dividend at .66 per quarter, equates to a rate just shy of 5%. All in all, it is a solid company with a positive future. (Short interest is approximately 26.6 million shares against an average short interest over the past twelve months of 25.2 million shares. There are 1,415 institutional holders with approximately 811.5 million shares in institutional hands. There are approximately 1.223 billion shares outstanding.)
When one contemplates the huge complexity of the petroleum and natural gas business, the crucial need for effective capital management, the risk factors, the complexity of transportation issues, and the other moving parts, some of which are slow and some fast, one cannot help but feel enormous respect for a company like COP which seems to get damn near every part of what it does very right. For that reason, and because the positive financials, ConocoPhillips certainly qualifies as a choice long-term hold.
One might expect that the market price of a company of this character and with such a broad spectrum of institutional holders would be regular and relatively smooth over time and hence would not be attractive to active traders. ConocoPhillips' chart, however, shows that there is considerable oscillation and that short-term trading opportunities are frequent and can be profitable. The chart below is illustrative. For 2013, the price has tended to bounce off roughly 56 to 57 and to rise to roughly 61 or better. Since November of 2012, there have been three distinct round trips. Whether one's predilection is to buy at the low and sell after a specified gain, or to be short on the down swing as well, the opportunities with ConocoPhillips are certainly attractive and frequent.
I want to point out two other characteristics that are evident from the chart. Normally, a stock will open lower on the ex-dividend date by approximately the amount of the dividend. With many issues, it can take some time before that market price resumes its former self. ConocoPhillips' price, however, seems unaffected by the dividend in most instances. Thus, the trading strategy should include an awareness of the ex-dividend date so that the dividend is harvested as well. (The dollar signs at the bottom of the chart equate to the ex-dividend dates.)
My second point is that the price is presently in a trading range with a somewhat upward bias. Based upon the chart, the analyst projections, and the rather regular growth pattern that can be expected from this kind of issue, it seems unlikely that there will be a dramatic break either to the upside or the downside. A careful trader should be able to glean respectable profits from trading in ConocoPhillips. A long-term holder will likely profit handsomely as well.
One final note. Those who have read my comments on SA may recall that I am a very tax conscious investor. Because of the dual qualities noted above, it can make sense to hold ConocoPhillips both for the long term, and also for a trading position. It seems sensible to me that if one is trading profitably in ConocoPhillips and is holding a long-term position, a portion of the trading gains should be used to add to the long term position so as to enjoy the lower tax rates on dividends and upon future capital gains.
I maintain a long position in COP as a foundational element in the energy portion of my portfolio. While I am not an active trader, I do trade ConocoPhillips long. I do not write options against my long position.