John Stephenson
ConocoPhillips
COP-N
DON'T BUY
Jun 30, 2005
Exxon (XOM-N) versus Conoco (COP-N). Exxon has the best capital discipline of the US majors. Has a very high return on capital employed (ROCE). Conoco is one of the worst, largely because they overpaid for some of their acquisitions. Haven't had particularily good numbers on their refining and marketing side.
(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 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.
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.
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.