Since April 2021, the S&P 500 has delivered a total return of 61.3%. But one standout stock has more than doubled the market - over the past five years, ConocoPhillips has surged 140% to $123.12 per share. Its momentum hasn’t stopped as it’s also gained 31.3% in the last six months thanks to its solid quarterly results, beating the S&P by 33.4%.
Is it too late to buy COP? Find out in our full research report, it’s free.
Why Is COP a Good Business?
Operating the famous Prudhoe Bay field discovered in 1968 that transformed Alaska's economy, ConocoPhillips (NYSE: COP) explores for and produces crude oil, natural gas, and liquefied natural gas across North America, Europe, Asia, and Africa.
1. Skyrocketing Revenue Shows Strong Momentum
Cyclical industries such as Energy can make mediocre companies look great for a time, but a long-term view reveals which businesses can actually withstand and adapt to changing conditions. Thankfully, ConocoPhillips’s 26.2% annualized revenue growth over the last five years was incredible. Its growth beat the average energy upstream and integrated energy company and shows its offerings resonate with customers.
2. Economies of Scale Give It Negotiating Leverage with Suppliers
The scale of a company’s revenue base is an important lens through which to view the topline, as it signals whether a producer has gone from a vulnerable commodity taker into a durable operating platform. Larger producers generate revenue across many wells, pads, takeaway routes, and geographies rather than relying on a single field or drilling program.
ConocoPhillips’s $61.55 billion of revenue in the last year is top-tier for the industry, suggesting the company has hit a level of diversification where investors can sleep easy at night.
3. Excellent Free Cash Flow Margin Boosts Reinvestment Potential
Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.
ConocoPhillips has shown robust cash profitability, giving it an edge over its competitors and the ability to reinvest or return capital to investors. The company’s free cash flow margin averaged 17.5% over the last five years, quite impressive for an upstream and integrated energy business.
Final Judgment
These are just a few reasons why ConocoPhillips ranks highly on our list, and with its shares topping the market in recent months, the stock trades at 17.3× forward P/E (or $123.12 per share). Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
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