Zacks' Bull Of The Day: ConocoPhillips

| About: ConocoPhillips (COP)

Looking for an energy play? ConocoPhillips (NYSE:COP) is the only Zacks Rank #1 (Strong Buy) among the large E&P companies. It is expected to grow earnings by the double digits this year.

ConocoPhillips is the largest independent exploration and production company in the world. It has operations in 27 countries, including in the oil sands and the Eagle Ford shale region, and has a market cap of $106 billion.

Many people probably confuse it with the large integrated oil companies like Exxon and Chevron but Conoco spun-off its refining and chemical operations in 2012, creating Phillips 66. Currently, it is strictly an exploration company.

Another Earnings Beat in Q1

On May 1, Conoco reported first quarter earnings which beat the Zacks Consensus Estimate by 15.3%. Earnings were $1.81 compared to the consensus of $1.57.

Conoco hasn't missed on the estimate since 2012.

Of course, with E&P companies the key is production. Investors want to see production growth.

After no production growth in 2012, Conoco has been turning it around. In 2012 it grew production by 2%. It has a stated goal for 2014 production between 3% and 5%.

It fell a little short of that goal in the first quarter as production rose just 2.8% but it is seeing bright spots. The Eagle Ford and Bakken regions in North American saw production rise 41% compared to the first quarter of last year.

A major project also started up in Malaysia in the quarter with preparations underway for four additional start-ups in Canada, Malaysia and the United Kingdom during the remainder of 2014.

Still a Value Play

Energy has been hot in 2014. The large cap E&Ps rank in the top 6% of the Zacks Industry Rank. Shares of Conoco have soared to 5-year highs.

Yet there's still value in the stock. It has a forward P/E of 13.4 which is well under the average of the S&P 500 of 17.1.

I'm not arguing the shares are as cheap as they have historically been. Conoco's forward P/E has been around 10 for most of the last 15 years. But combined with earnings that are expected to grow 12.8% this year, the valuation doesn't look too out-of-whack.

Juicy Dividend

In addition to the share appreciation, investors have also been rewarded with a juicy dividend that is currently yielding 3.2%. This is the highest among its peers who average between 1% and 2.8%.

For investors looking for a big-cap energy play with an attractive valuation, ConocoPhillips is definitely one to keep on the short list.