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Barron's: Why ConocoPhillips Is an Energy Stock Worth Buying

Barron's: Why ConocoPhillips Is an Energy Stock Worth Buying
(Piotr Trojanowski-dreamstime)

By    |   Monday, 21 October 2019 08:37 AM

ConocoPhillips reportedly remains an energy stock worthy of investor dollars in a time when Wall Street has soured on the energy sector amid sliding prices.

ConocoPhillips stock had recently jumped to a high of $80 a year ago from about $45. But the shares have since fallen back under $55. “Blame weaker commodity prices, a rout in E&P stocks, the rise of socially responsible investing, and fears about the industry’s future,” Barron’s said.

However, with the selloff, the shares of the world’s largest independent oil and gas producer look appealing, Barron’s said. ConocoPhillips (COP) has “an attractive global resource base, including a leading position in the Eagle Ford region of Texas, a strong balance sheet, and low production costs,” Barron’s said.

“It’s the best house in a bad neighborhood. The company has a well-diversified and free-cash-flow-generative portfolio, execution is strong, and the strategy is on track,” Phil Gresh, an energy analyst with J.P. Morgan, told Barron's. He has an “overweight” rating and a $68 price target for the Houston, Texas-based oil and gas producer.

Investors have been pressing oil producers to cut spending on expansion and increase returns with share buybacks or dividends. The company recently said it would increase full-year buyback target by $500 million to $3.5 billion and could spend up to $300 million on acquisitions, Reuters said.

Earlier this year, ConocoPhillips Chief Executive Officer Ryan Lance repeated a pledge to restrain spending, saying the U.S. oil producer would not be drawn into pricey mergers and acquisitions.

ConocoPhillips plans to keep its capital spending at around $6 billion this year, Lance told shareholders at the company’s annual meeting. ConocoPhillips has won billions of dollars in arbitration awards over the expropriation of its assets in Venezuela and posted a first-quarter profit that topped estimates.

“We’re sticking to our plan,” Lance said, Reuters reported.

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ConocoPhillips reportedly remains an energy stock worthy of investor dollars in a time when Wall Street has soured on the energy sector amid sliding prices.
conocophillips, energy, stock, buying
304
2019-37-21
Monday, 21 October 2019 08:37 AM
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