As the petroleum market tightens, enterprising investors might want to get exposure to conventional (i.e., oil and natural gas) energy stocks. One way to express your view that oil and gas prices will remain elevated is by holding shares of ConocoPhillips (NYSE:COP) stock.
We’ve already identified ConocoPhillips as a dependable dividend payer, and we’re sticking to that view today.
ConocoPhillips might not have met analysts’ earnings expectations, but the company is a powerful producer that’s not over-valued on Wall Street.
Bad and Good News About ConocoPhillips
If you’re a stickler for earnings beats, then what we’re about to tell you might be a deal-breaker. For the second quarter of 2023, ConocoPhillips reported $1.84 per share in adjusted earnings, missing the analysts’ consensus estimate of $1.95 per share.
This, plus the possibility that volatile oil and natural gas prices might decline in the near term, meaning that COP stock should get a “B” grade instead of an outright “A” grade. Nevertheless, there are some positive points to observe with ConocoPhillips.
First of all, ConocoPhillips delivered 1.805 million barrels of oil equivalent per day (MBOED) in Q2 2023. That’s a quarterly record for the company.
Second, ConocoPhillips raised its full-year production outlook to a range of 1.8 to 1.81 MMBOED. The company’s prior guidance called for 1.78 to 1.8 MMBOED.
In addition, ConocoPhillips completed $1.3 billion worth of share repurchases during the second quarter. So, despite the earnings miss, the overall picture looks bright for ConocoPhillips and its shareholders.
COP Stock Isn’t Too Richly Valued
For much of 2023’s first half, conventional energy stocks underperformed other sectors, such as technology. However, as the oil price climbed this summer, COP stock rallied from $100 to $117.
This doesn’t mean that the shares are too expensive to consider buying now. Indeed, value-conscious investors should appreciate ConocoPhillips’ trailing 12-month price-to-earnings (P/E) ratio of 11.26x, which isn’t outlandishly high in today’s market.
Income-focused investors can relax and collect ConocoPhillips’s reliable dividend distributions. Currently, the company pays a forward annual dividend yield of 2.05%, so consider that a nice bonus for long-term shareholders.
And by the way, COP stock should appeal to investors seeking exposure to the natural gas market. Recently, ConocoPhillips inked “20-year deals to receive a collective 2.2 million tons of liquefied natural gas (LNG)” per year “from Mexico Pacific’s Saguaro export facility.” Thus, if LNG demand increases, ConocoPhillips and its shareholders could benefit.
COP Stock: An Intriguing Oil and Gas Play
Some financial traders won’t choose to invest in ConocoPhillips. They might be concerned about the company’s second-quarter EPS miss. Or, they may not expect oil and natural gas prices to stay elevated.
On the other hand, ConocoPhillips should appeal to investors who focus on dividends and/or valuations. Besides, ConocoPhillips is clearly an ambitious oil and gas producer.
Therefore, COP stock gets a “B” grade and should be appropriate for some people seeking returns in the conventional energy market.
On the date of publication, Louis Navellier had a long position in COP. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.
The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
