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ConocoPhillips, Total, Statoil still worth buying, Citigroup says

Sep. 01, 2015 3:58 PM ETConocoPhillips (COP) StockCOP, XOM, TTE, CVX, EQNRBy: Carl Surran, SA News Editor28 Comments
  • Citigroup's energy analysts defend their bullish take on big oil stocks such as ConocoPhillips (COP -2.6%), Total (TOT -2.1%) and Statoil (STO -4.5%), pointing to 30-year valuation lows, upside asymmetric risk on oil prices and signs that managements are doing enough to turn the corner on better capital allocation and cost-cutting.
  • Favoring COP, TOT and STO, the firm says its sector investment criteria are (1) growth - companies that have near-term growth are less reliant on simply cutting costs; (2) better capital allocation - combined with growth, it should deliver 2-3x the ROE uplift than cost-cutting can; and (3) a strong enough balance sheet to manage the early part of the cycle.
  • Citi is staying away from Exxon Mobil (XOM -4%) because of its valuation premium to peers and low growth and from Chevron (CVX -3.2%) due to its slow response in a lower commodity world.

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