Back to top

Image: Bigstock

Here's Why Hold Strategy is Apt for ConocoPhillips (COP) Now

Read MoreHide Full Article

ConocoPhillips (COP - Free Report) , 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, approaching $79 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, the 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 energy companies include Sunoco LP (SUN - Free Report) , Energy Transfer LP (ET - Free Report) and Murphy USA Inc. (MUSA - Free Report) . All the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.   

Sunoco, a leading independent fuel distributor in the United States, has a stable business model and relatively lower exposure to commodity price volatility. This is because the partnership distributes fuel to branded distributors under long-term contracts. 

With more than 125,000 miles of pipeline and associated energy assets, Energy Transfer will generate stable fee-based revenues. The partnership’s pipeline network spans all the key oil and natural gas resources across the United States.

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.


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


ConocoPhillips (COP) - free report >>

Sunoco LP (SUN) - free report >>

Murphy USA Inc. (MUSA) - free report >>

Energy Transfer LP (ET) - free report >>

Published in