We are upbeat about ConocoPhillips’ COP prospects and believe that the leading explorer and producer of oil and gas is a promising pick right now.
The company currently carries a Zacks Rank #2 (Buy) and has a VGM Score of B. Our research shows that stocks with a VGM Score of A or B when combined with a Zacks Rank #1 (Strong Buy) or 2 offer the best opportunities for investors. You can see the complete list of today’s Zacks #1 Rank stocks here.
Let’s take a look at the other factors that make this upstream energy firm an attractive bet.
On the basis of proved oil and gas reserves and production volumes, ConocoPhillips is the largest independent exploration and production company in the world. The company has worldwide operations, in regions like the United States, Canada, Australia and Europe.
In the United States, the company has a strong foothold in prolific shale plays like Eagle Ford, Bakken and Permian. Notably, from 2020 to 2029, ConocoPhillips expects to generate roughly $19 billion free cashflows from operations in Lower 48.
Of the total projected free cashflows, the company expects to generate $12 billion from Eagle Ford alone. This is because ConocoPhillips estimated roughly 3,800 undrilled locations in Eagle Ford that has improved the explorer’s production outlook.
Moreover, the company has significantly lowered exposure to debt as compared to composite stocks belonging to the industry. At the end of third-quarter 2019, the company had a debt-to-capitalization ratio of 30%, lower than the industry average of 42.8%.
Other Stocks to Consider
Other prospective players in the energy space are Ecopetrol SA EC, California Resources Corporation CRC and CNX Resources Corporation CNX. While Ecopetrol sports a Zacks Rank #1, California Resources and CNX Resources carry a Zacks Rank #2 at present.
Ecopetrol is likely to have witnessed earnings growth of 7% in 2019.
California Resources’ earnings beat the Zacks Consensus Estimate in three of the past four quarters.
CNX Resources’ earnings surpassed the Zacks Consensus Estimate in two of the prior four quarters. It has a positive earnings surprise of 34.8%, on average, for the trailing four quarters.
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