ConocoPhillips: Positioned for Greater Rewards

It seems that the market does not want to recognize the true value in ConocoPhillips (COP), despite its strong fundamentals, solid financial & operational results and the fact that Buffett and Soros believe in their prospects.

Some observes have been critical of the Burlington deal and that fact that they are pursuing aggressive and potentially risky investments in Asia and the Middle East along with their non controlling stake in Lukoil. However, we feel that they are positioning themselves for greater rewards in the future. These are the kind of opportunities we like when the market seems to take a bearish view of these recent investments (i.e. potential political and economical turmoil in Russia) rather than focus on the incredible opportunity and the upside potential that their investments can deliver.

With fair value estimates from various analysts and publications ranging between 100 and 120 USD, their current price and the fact that they have just increased the dividend by almost 15%, we think that ConocoPhillips is an interesting value play.

Disclosure: none

Comments

[jack kreg:]

25-80 in 5 years, and your complaining, or did you buy after this big run up, hoping for it to continue?

earnings peaked in 07 at $10/share, estimates are for dropping earnings, $8 in 08 and $7.80 in 09, buy on decreasing earnings,

oil is making double tops at $100 as the global economy moves to slow, and the largest oil consumer, the USA, moves towards recession.

Price to book is 1.5, and price to cash flow is 6, pretty cheap.
While, by some metrics, COP looks undervalued, I am not ready to buy this late in the game, stock has way over performed for 5 years, does not pay a really high dividend, 2.3%, so I can just wait.
I conclude that there is no compelling case to invest in COP at this time.

2008 Feb 21 12:41 PM