10 Most Undervalued Energy Stocks to Buy According to Hedge Funds

2. ConocoPhillips (NYSE:COP)

No. of Hedge Fund Holders: 86

Forward P/E Ratio as of May 2: 11.03

ConocoPhillips (NYSE:COP) is one of the world’s largest independent E&P companies based on oil and natural gas production and proved reserves.

ConocoPhillips (NYSE:COP) has recently transformed itself into a low-cost oil producer by selling its higher-cost oil assets and recycling that capital into acquiring lower-cost resources. The company significantly bolstered its position with the $22.5 billion acquisition of Marathon Oil last year, which added over 2 billion barrels of oil and gas resources with an average cost of supply below $30 to its portfolio. As a result, the company reported a strong performance in Q4 2024, posting an adjusted EPS of $1.98 against estimates of $1.83. COP’s production also rose 14.8% YoY to 2.183 million boe/d in Q4 2024.

ConocoPhillips (NYSE:COP) maintains a strong balance sheet, generating $20.3 billion in operational cash flow in FY2024. Renowned for its commitment to shareholders, the company returned $9.1 billion in the form of buybacks and dividends last year, representing 45% of CFO and well above its 30% commitment. COP boasts an impressive streak of 10 consecutive years of dividend growth and has plans to return $10 billion to its shareholders this year.

In a setback for ConocoPhillips (NYSE:COP), the stock was downgraded last week from ‘Buy’ to ‘Neutral’ by Bank of America’s Kalei Akamine, who lowered its price target from $138 to $107 per share. The new take was part of a broader update on oil and gas stocks.