We recently compiled a list of the 18 Best 52-Week Low Stocks to Buy Now According to Short Sellers. In this article, we are going to take a look at where ConocoPhillips (NYSE:COP) stands against the other 52-week low stocks.

Buying low and selling high is a popular investment strategy that value investors inspired by Warren Buffett have perfected over the years. The legendary investor has consistently emphasized the importance of identifying stocks of undervalued companies with significant growth prospects and holding onto these investments for an extended period.

Some of the most undervalued stocks to buy are those trading near their 52-week lows, backed by solid underlying fundamentals. A lot of these companies have durable competitive advantages but have fallen due to an overreaction by pessimists to short-term headwinds. The companies should boost strong brands in their respective fields with high barriers to entry.

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Value investing means paying attention to more than just the stock price but by focusing on valuation. A pullback often creates buying opportunities where quality companies become available at low price-to-earnings multiples or low price-to-sales ratios relative to their industries.

Over the past 20 years, 95% of investment firms have failed to beat the S&P 500. In contrast, Buffett has averaged an annual return of 20%, nearly double the S&P 500 over the same period.

With the S&P 500 up by about 20% for the year, most stocks are trading at premium valuations above their 52-week highs. The impressive gains have come amid unfavorable market conditions, with interest rates near all-time highs of between 5.25% and 5.50%.

On the other hand, some stocks have pulled back significantly and are currently trading close to the 52-week lows, their core business hurt by the high interest rate environment. Additionally, some of the stocks have underperformed due to deteriorating macroeconomics. Concerns that the U.S. economy could plunge into recession have always hurt some of the stock’s sentiments. The U.S. Federal Reserve is expected to cut interest rates in September and these stocks might not be near their lows for long.

According to Stuart Keiser, Citi head of equity trading strategy, the high interest rate environment  has left  the market in a  very unstable situation amid a “ tricky environment.” Likewise many investors are on edge as to whether there will be a soft or hard landing. Keiser said, in an interview on CNBC’s Fast Money:

“Basically you had a 12 to 18 month period  of positive economic surprise of what I would call  higher for longer  growth strong rate cuts getting pushed out. Markets were able to deal with that  because growth was really positive. Since late June economic data surprised negative, economic data momentum negative. The market is now trading  instead of  higher for longer  trading, a bit of growth slowdown. That’s why you are getting this schizophrenia because as growth decelerates  you get into a borderline at which the risk becomes really big that  you could  go hard landing  instead of soft landing. So our view is that the risk reward is not what it was a  couple of months back”

Amid the market outlook uncertainty, focusing on stocks near the 52-week lows is a sure way of balancing the risk reward amid the premium valuation in play. While the focus has been on artificial intelligence investment plays, stocks in various sectors are trading at discounted valuations and are sure to offer significant returns.

Our Methodology

To compile the list of the best 52-week low stocks to buy now, according to short sellers, we first screened for stocks that were trading near their  52-week lows (0-10%  range) using the Finviz stock screener. Next, we looked at their short interest and picked the stocks with the lowest short interest that were the most popular among elite hedge funds. The stocks are ranked in descending order of their short interest.

At Insider Monkey, we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).

ConocoPhillips (NYSE:COP)

52 Week Range: $102.27 – $135.18

Current Share Price: $112.43

Number of Hedge Fund Holders: 72

Short interest rate: 1.37%

ConocoPhillips (NYSE:COP) is one of the best 52-week low stocks to buy now, according to short sellers. The company explores and markets crude oil, natural gas, and liquefied natural gas. The stock is only up 8% from its 52-week low, signaling a significant pullback over the past year.

ConocoPhillips (NYSE:COP)’s earnings have grown significantly over the last three months. By the end of June 2024, the company reported a revenue growth rate of around 10.27%, marking a notable rise in its overall income, largely due to increased production and higher oil prices. However, when compared to its rivals, the company faced challenges, with its growth rate falling short of the average in the Energy sector.

ConocoPhillips (NYSE:COP) ‘s profit margin stands out, surpassing the norm in the industry. With a remarkable profit margin of 17.05%, the company demonstrates robust profitability and efficient management of costs. ConocoPhillips’s debt-to-equity ratio falls below the sector average. With a ratio of 0.37, the firm depends less on borrowing, keeping a better equilibrium between its debt and equity, which investors see as a favorable aspect.

In the lead-up to the U.S. presidential elections, the oil and natural gas industry, encompassing ConocoPhillips, might experience a surge in activity, investment, and exports if a potential Trump administration comes into power.

The Federal Trade Commission closely examines ConocoPhillips (NYSE:COP) ‘s proposed merger with Marathon Oil. Despite this regulatory challenge, both companies are hopeful about the merger’s future and are collaborating closely with the FTC, expecting the deal to be completed by the fourth quarter of 2024. These are the latest updates on the company’s operations.

While trading at a price-to-earnings multiple of 12 compared, ConocoPhillips (NYSE:COP) rewards investors with a 2.80% dividend yield for generating some passive income. The short interest on the stock stood at 1.37% as of the end of July.

According to Insider Monkey’s database, there are 72 hedge funds bullish on ConocoPhillips (NYSE:COP) as of the end of June, up from 62 in the preceding quarter. With over 14.52 million shares, Eagle Capital Management was the company’s leading stakeholder in the second quarter.

Here is what Invesco Growth and Income Fund said about ConocoPhillips (NYSE:COP) in its Q2 2024 investor letter:

“Stock selection in the industrials and health care sectors detracted from relative performance during the quarter. Selection and an underweight in consumer staples also hurt relative return as the sector was one of just two index sectors with a positive return for the quarter. ConocoPhillips (NYSE:COP): The company announced its acquisition of Marathon Oil in May. The deal is expected to increase earnings and will increase the scale of Conoco’s production assets. However, the stock traded lower on the news.”

Overall COP ranks 6th on our list of the 52-week low stocks to buy now according to short sellers. While we acknowledge the potential of COP as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than COP, check out our report about the cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.