5 Stocks to Buy According to Roger Ibbotson’s Zebra Capital

2. Ovintiv Inc. (NYSE:OVV)

Zebra Capital’s Stake Value: $1.169 million

Number of Hedge Fund Holders: 44

Exploration and energy companies are abundant among the top 10 stocks to buy according to Roger Ibbotson’s Zebra Capital, and Ovintiv Inc. (NYSE:OVV) is no exception. Initially founded in Canada, the company is now headquartered in Delaware, in the United States. With $8.7 billion in revenue in 2021, Ovintiv Inc. (NYSE:OVV) has a land position of more than 1.3 million net acres in Canada, and 929,000 acres in the United States.

Ovintiv Inc. (NYSE:OVV)  is also one of the very few companies to have seen its share price increase in 2022, registering an increase of nearly 14%, and a double digit increase in 2022 is nothing to scoff at in this economy. J.P. Morgan upgraded its target price of Ovintiv Inc. (NYSE:OVV) to $64 from $56.

In their Q4 2021 investor letter, Miller Value Partners mentioned Ovintiv Inc. (NYSE:OVV). Here is what it said:

“The outlook for high multiple favorites depends to a great degree on interest rates. Warren Buffett likened interest rates to the force of gravity for asset prices. At current low levels, high valuations on long-duration assets can be justified. If interest rates move up, the adjustment will be painful. Market action early in the new year, with the swift moves up in interest rates and down in the Nasdaq, offers a taste of the medicine.

We underwrite all our names to have sufficient upside even if risk-free rates move up to 3% (a scenario, not a forecast!). As we evaluate the opportunity set, we find more attractive prospects in the classic value names. We often hear that people think value investing is dead, which only strengthens our conviction. Our gross exposure to classic value has risen from 44% a year ago to 62% currently.

One new name that illustrates the potential we see is Ovintiv (OVV), an oil and gas producer. We’ve seen a huge shift in the industry away from growth towards returns on capital, cash generation, and capacity discipline. OVV exemplifies the change.”