We recently published a list of 10 Most Profitable Value Stocks to Buy Now. In this article, we are going to take a look at where ConocoPhillips (NYSE:COP) stands against other profitable value stocks to buy now.
Matt Powers, Managing Partner at Powers Advisory Group, joined the discussion on CNBC’s ‘Power Lunch’ on March 11 to provide insights into the shift from growth to value investing and the resurgence of traditional dividend strategies. Powers emphasized that this transition has become increasingly evident, particularly following last week’s market activity and the events of March 10. He noted that while the market behavior on March 11 might tell a slightly different story, the broader trend is unmistakable. For years, growth stocks dominated portfolios, but now investors are gravitating toward value and dividend investing, which had been largely overlooked for over a decade. Powers attributed this shift to various catalysts, which included tariffs and policy uncertainty from Washington and President Trump’s unpredictable stances. He described investors as exhausted, and welcomed the normalization of equity markets and a return to diversification and traditional investing.
Powers highlighted the importance of diversification, contrasting high-growth portfolios with those focused on dividends. He pointed out that ETFs have outperformed large-cap growth funds year-to-date, with a notable 11-point difference in returns. The dividend fund is up 5%, while the large-cap growth fund is down 6%. He explained that tech stocks dominate large-cap growth funds and account for nearly half of their portfolios. In contrast, dividend-focused funds are more diversified across sectors such as healthcare, financials, and staples. This diversification reduces concentration risk and provides defensive characteristics in an uncertain market environment. Powers elaborated on the leadership shift between these two types of funds. While growth ETFs feature holdings like the MAG7, dividend ETFs focus on blue-chip companies. A year ago, growth stocks were investor favorites, but now value stocks are taking the lead, which is a trend reflected in their performance. He stressed the importance of broadening diversification within portfolios and not ignoring value opportunities.
Methodology
We sifted through the Finviz stock screener to compile a list of the top stocks with a forward P/E ratio under 15. We then selected the 10 stocks with a TTM net income greater than $1 billion and that were the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q4 2024.
Note: All data was recorded on March 13.
Why are we interested in 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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A vast oil and gas rig silhouetted in the sunset, capturing the power of Swift Energy Company.
ConocoPhillips (NYSE:COP)
TTM Net Income as of March 13: $9.245 billion
Forward P/E Ratio as of March 13: 11.01
Number of Hedge Fund Holders: 86
ConocoPhillips (NYSE:COP) is an energy company that explores, produces, and markets crude oil, natural gas, and LNG. It operates across six continents and manages a diverse portfolio which includes North American shale, international conventional assets, Canadian oil sands, and global LNG projects.
The company’s Lower 48 operations are focused on US oil and gas production and drive the majority of the company’s revenue. In 2024, production increased by 5% year-over-year, which contributed to a 4% overall company growth. Further expansion is planned for 2025. In Q4 2024, Lower 48 output reached 1,308,000 barrels of oil equivalent per day. This was broken down as 833,000 barrels of oil equivalent per day in Permian Basin, 296,000 in Eagle Ford, and 151,000 barrels in Bobcat.
The company will reduce Lower 48 capital spending by $1.4 billion in 2025 to increase efficiency. This reduction is due to cost savings from the Marathon acquisition and better drilling techniques. This acquisition supports the company’s US shale presence, increases production, and promises significant cost savings. ConocoPhillips (NYSE:COP) anticipates over $1 billion in acquisition savings by the end of 2025, with more than half already included in the 2025 budget.
Overall, ConocoPhillips (NYSE:COP) ranks 8th on our list of the most profitable value stocks to buy now. While we acknowledge the growth potential of COP as an investment, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than COP but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires
Disclosure: None. This article is originally published at Insider Monkey.
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