Brian Acker, CAConocoPhillipsCOPCOMMENTNov 29, 2013
When you are calculating upside to a model price, in addition to valuation does your assessment process also give you an idea about what exactly is strong with regards to quality of management?Quality of management comes through the numbers. When you see good management, the math is perfect. On this one, management does not know what they are doing compared to Exxon Mobil. But realize that these are over long periods of time. Also, remember that this one went through a reorganization when they kicked out the refiner. His model prices $82, which is a 13%-13.5% upside, which is good, but he is finding a whole lot of value elsewhere. (See Top Picks.)
He remains overweight energy in this name and others. Oil is a great hedge to geopolitical risk, like a flare-up in Iran or the Russian war. Also, we're entering summer driving season. Also, oil will benefit from a rotation into the value trade. Oil companies are fundamentally sound.
Energy remains a favoured sector as oil and gas prices remain up from supply constraints. A large, diversified operator with lower production costs. Trades at 10x, a little expensive, but still high quality.
A good proxy for the energy sector. Can't comment on short-term trading, because it all depends on where crude oil and nat gas prices go. It's a well-run company and pays an okay dividend, though not high.
(A Top Pick Jun 24/21, Up 55%) He's adding to this. Energy remains attractive as oil prices remain firm. The current pullback in oil prices opens an opportunities. Pays a 2% dividend. 10% free cash flow. Will buyback shares and pays dividends.
(A Top Pick Mar 03/22, Down 5%)Stockchase Research Editor: Michael O'Reilly Our PAST TOP PICK with COP has triggered its stop at $93. To remain disciplined, we recommend covering the position at this time. This will result in a net investment gain of 50%, when combined with our previous buy recommendation.
(A Top Pick Mar 03/22, Up 64.8%)Stockchase Research Editor: Michael O'Reilly Our PAST TOP PICK with COP is progressing well. We now recommend trailing up the stop (from $80) to $95 at this time.
Stockchase Research Editor: Michael O’Reilly The recent tragic events in Ukraine underscore the urgency of security of energy supply and that is why COP is reiterated as a TOP PICK. With holdings in the most prolific basins in the US -- Eagle Ford shale, Bakken shale, and Delaware Basin and term debt that is only 23% of the capital structure makes this a good strategic fit. We also like that they have building cash reserves while paying down debt and buying back shares and it pays a dividend backed by a payout ratio of 33% of cash flow. We recommend trailing up the stop (from $50) to $80, looking to achieve $115 -- over 16% upside. Yield 1.45% (Analysts’ price target is $103.56)
When you are calculating upside to a model price, in addition to valuation does your assessment process also give you an idea about what exactly is strong with regards to quality of management? Quality of management comes through the numbers. When you see good management, the math is perfect. On this one, management does not know what they are doing compared to Exxon Mobil. But realize that these are over long periods of time. Also, remember that this one went through a reorganization when they kicked out the refiner. His model prices $82, which is a 13%-13.5% upside, which is good, but he is finding a whole lot of value elsewhere. (See Top Picks.)