Not The Market Police – COP Is A Good Buy For The Long Term
CONOCO-Phillips For The Long Haul
First of all I’d like to start with my favorite general screen:
I see a lot of long term resistance at the current price level which at every previous occasion of touching the bottom returned sharply. This is a long term pattern I paticularly like to invest in. Also what I like is even at this level COP has gained 13% per year for the last 25 years. For a bare bottom return where you can tack on a nearly 4% dividend yield, you could be doing a lot worse. In fact, I know I have done worse! I also feel the dividend is safe as it only represents 16% of earnings.
Right now CONOCO-Phillips has a P/E ~ 5, but more excitingly a PEG of 0.47! Even if the growth is only half of the expected CONOCO still has an attractive valuation.
Personally, I believe oil prices will rise again as the oil cartels (OPEC) will pull back supply in attempt to make the most on their oil before other alternatives have any time to take hold. Any energy independence in this nation will take decades so until then we will continue to be at the whim of outside forces. This is a plus for CONOCO.
However, on the short term I’m having a harder time pricing COP – the oil market is still volatile and could continue to see wild swings as well as the stock market in general, I’d definitely purchase COP for your longer term portfolio.
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