ConocoPhillips (COP)

Her clients have done well in energy, because of the types of names they own in this environment. As crazy as it sounds, the fall in energy prices does have a silver lining. One of the more frustrating things in a market is when you have a lot of capital chasing returns that don’t make any sense. Their ROC over time has been very strong. She thinks this will give good returns over time.

Stock vs. Stock. BP-N vs. COP-N. COP-N has outperformed BP-N, but that is history. You have to know the management, their business plan, and he does not know that. COP-N is probably not relatively cheap.

(Market Call Minute.) Their refining margins should benefit from energy prices. They will trade like the rest of the integrated oil companies. Will be somewhat dependent on the price of oil. You could buy it here, but the risk is falling prices.

Even though the most recent quarter had several one-time items that allowed it to meet expectations, overall there is a pretty good line of sight for production growth, particularly with regards to its projects in Poland, Malaysia and on the Canadian side. These production increases outsource to lower risk OECD countries. Trading at about 5X cash flow and 11X earnings. Around $60 would be a great support level to pick it up.

(A Top Pick April 19/13. Up 18.39%.) Still likes. As energy stocks sold off coming into the new year, they were pressured like everybody else. Earnings were somewhat mixed. Valuations are still reasonable, especially since the stock has pulled back.

Most recently they have really started to accelerate and then correct. You might need some more time for the correction. $65 would be a better place to get in but it is definitely an attractive stock.

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.)

Earnings were good and production growth was strong. Interesting thing is that this is more of a transition story and transition continues to be underway. Selling a lot of assets in countries where they don’t think they can have a big strategic gain. Feels they are domestically focused on shale plays so are buying local assets.

For anything in the energy space, she would really recommend Chevron (CVX-N) which is an incredibly run company with an ROC that historically has been very, very good. Also has very good global pricing and exposure to all the major energy areas and a very strong management team.

(A Top Pick April 19/13. Up 13.74%.) Bought it originally because it was a large integrated name with 50% gas and 50% oil and participating in most parts of the energy complex. Decent dividend with an opportunity to grow it. Has a very nice track of proven reserves as well as probable reserves.

(Top Pick Apr 19/13, Up 8.14%)

Feels it might be better to be in an integrated name. This gives you a fairly diversified portfolio of onshore, offshore, etc. There is a good gas portfolio and a good oil portfolio. You are getting paid 4.61% to be in the stock. Thinks they can be free cash flow positive in the next year. 4.5X EBITDA is a relatively good valuation entry point. Could see it at $70 in the next 2 years.

An outstanding company and not one you should be overly worried about.