Here's Why Hold Strategy is Apt for ConocoPhillips (COP) Now
ConocoPhillips COP, a leading upstream energy firm in the world in terms of production and reserves, is well-positioned to capitalize on handsome crude prices. Currently, the firm carries a Zacks Rank #3 (Hold).
Factors Working in Favor
West Texas Intermediate crude price, trading at more than $70 per barrel, is highly favorable for upstream activities.
ConocoPhillips has secured a solid production outlook thanks to its decades of drilling inventories across its low-cost and diversified upstream asset base. The resource base represents the company’s strong footprint in prolific acres in the United States, comprising Eagle Ford shale, Permian Basin and Bakken shale. ConocoPhillips boasted that drilling and completion activities are increasingly becoming efficient in all the key U.S. basins.
Compared to composite stocks belonging to the industry, the leading upstream energy company has considerably lower exposure to debt capital. This reflects that COP is better positioned to rely on its strong balance sheet to withstand any adverse business scenario.
Risks
Being an upstream energy player, the company’s overall operations are exposed to volatility in oil and natural gas prices. Moreover, the company’s overall operating and production expenses continue to increase due to the inflationary market, hurting the bottom line.
Stocks to Consider
Better-ranked players in the energy space include Murphy USA Inc. MUSA, The Williams Companies, Inc. WMB and Transportadora de Gas del Sur SA TGS. While Murphy USA and The Williams Companies sport a Zacks Rank #1 (Strong Buy), Transportadora de Gas carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Murphy USA is a renowned retailer of gasoline and convenience goods, distinguished by its adaptable business model that effectively enhances profitability during periods of economic expansion and recession.
The Williams Companies is well-poised to capitalize on the mounting demand for clean energy since it engages in transporting, storing, gathering and processing natural gas and natural gas liquids.
With its pipeline networks spread across more than 30,000 miles, the company connects premium basins in the United States to the key market. WMB’s assets can meet 30% of the nation’s consumption of natural gas, which is utilized for heating purposes and clean-energy generation. Thus, the company will be generating stable fee-based revenues and has witnessed upward earnings estimate revisions for 2024 over the past 30 days.
Transportadora’s midstream asset portfolio has the most extensive natural gas pipeline network in Latin America. It generates stable fee-based revenues since its pipeline assets transport more than 60% of the gas consumed in Argentina.
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Williams Companies, Inc. (The) (WMB) : Free Stock Analysis Report
ConocoPhillips (COP) : Free Stock Analysis Report
Murphy USA Inc. (MUSA) : Free Stock Analysis Report
Transportadora De Gas Sa Ord B (TGS) : Free Stock Analysis Report
