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ConocoPhillips (COP) Jumps 8.3% MTD: More Room for Upside Left?
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ConocoPhillips’ (COP - Free Report) shares have jumped 8.3% month to date (MTD) versus the industry’s 7.4% growth. Notably, the Zacks Rank #3 (Hold) stock has witnessed upward earnings estimate revisions for 2021 and 2022, respectively, in the past 60 days.
Let’s delve into the factors behind the stock’s price appreciation.
What’s Favoring the Stock?
The price of West Texas Intermediate crude, trading at more than $60 per barrel mark, has improved drastically from the pandemic-hit April last year, when oil was in the negative territory. With coronavirus vaccines being rolled out at a massive scale, leading to a gradual reopening of the economy, the demand for fuel will possibly improve further. This is likely paving the way for further oil price recovery.
Overall, improving oil prices are definitely a boon for ConocoPhillips’ upstream operations. This is because the company is a leading oil producer with a strong presence in Lower 48 major acreage areas that comprise prolific shale plays like Permian basin, Bakken and Eagle Ford. The company’s production profile looks bright since it has decades of low-cost premium drilling sites in those resources.
The company also has a sound balance sheet with significantly lower debt exposure as compared to the composite stocks belonging to the industry. Notably, the company’s debt-to-capitalization ratio of 0.32 is lower than the industry’s 0.40.
One of the announcements that is pleasing investors is the company’s resumption of share repurchases at an annualized level of $1.5 billion. Notably, ConocoPhillips has decided to commence selling out its 10% stake in Cenovus Energy Inc. (CVE - Free Report) by year-end 2022, which began in the second quarter of this year. The fund will get allocated for incremental share repurchases.
Risks
Although the long-term view seems lucrative, in the short term, the stock is still exposed to oil price volatility since the pandemic is still not over. Moreover, increasing production and operating expenses is hurting the upstream energy company’s bottom line. Notably, in the March quarter of this year, the company reported $1,383 million in production and operating expenses, which is the highest as compared to any of quarter of 2020.
Last Word
It can be concluded that the company, with key projects of emission reductions, has plenty of room left for further stock price upside despite some of the lingering risk factors.
Whiting Petroleum has witnessed upward earnings estimate revisions for 2021 in the past 30 days.
Matador is likely to see earnings growth of 300% in 2021.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 77 billion devices by 2025, creating a $1.3 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 4 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2022.
Image: Bigstock
ConocoPhillips (COP) Jumps 8.3% MTD: More Room for Upside Left?
ConocoPhillips’ (COP - Free Report) shares have jumped 8.3% month to date (MTD) versus the industry’s 7.4% growth. Notably, the Zacks Rank #3 (Hold) stock has witnessed upward earnings estimate revisions for 2021 and 2022, respectively, in the past 60 days.
Let’s delve into the factors behind the stock’s price appreciation.
What’s Favoring the Stock?
The price of West Texas Intermediate crude, trading at more than $60 per barrel mark, has improved drastically from the pandemic-hit April last year, when oil was in the negative territory. With coronavirus vaccines being rolled out at a massive scale, leading to a gradual reopening of the economy, the demand for fuel will possibly improve further. This is likely paving the way for further oil price recovery.
Overall, improving oil prices are definitely a boon for ConocoPhillips’ upstream operations. This is because the company is a leading oil producer with a strong presence in Lower 48 major acreage areas that comprise prolific shale plays like Permian basin, Bakken and Eagle Ford. The company’s production profile looks bright since it has decades of low-cost premium drilling sites in those resources.
The company also has a sound balance sheet with significantly lower debt exposure as compared to the composite stocks belonging to the industry. Notably, the company’s debt-to-capitalization ratio of 0.32 is lower than the industry’s 0.40.
One of the announcements that is pleasing investors is the company’s resumption of share repurchases at an annualized level of $1.5 billion. Notably, ConocoPhillips has decided to commence selling out its 10% stake in Cenovus Energy Inc. (CVE - Free Report) by year-end 2022, which began in the second quarter of this year. The fund will get allocated for incremental share repurchases.
Risks
Although the long-term view seems lucrative, in the short term, the stock is still exposed to oil price volatility since the pandemic is still not over. Moreover, increasing production and operating expenses is hurting the upstream energy company’s bottom line. Notably, in the March quarter of this year, the company reported $1,383 million in production and operating expenses, which is the highest as compared to any of quarter of 2020.
Last Word
It can be concluded that the company, with key projects of emission reductions, has plenty of room left for further stock price upside despite some of the lingering risk factors.
Stocks to Consider
Meanwhile, a couple of better-ranked players in the energy space include Whiting Petroleum Corporation and Matador Resources Company (MTDR - Free Report) . Both the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Whiting Petroleum has witnessed upward earnings estimate revisions for 2021 in the past 30 days.
Matador is likely to see earnings growth of 300% in 2021.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 77 billion devices by 2025, creating a $1.3 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 4 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2022.
Click here for the 4 trades >>