About six month's ago, I decided to make a small investment in one of America's oil companies, Conoco Phillips (COP).
The overall health of the company was very good, but oil price fluctuations worldwide had lowered the stock price to a bargain level. I decided to make a small investment at $63 a share.
A quick analysis of the company today (where the stock hovers between $80-$90 a share) shows there are still bullish signs. Comparing Conoco Phillips with industry standards reveals important financial information that may continue to push the price upwards.
Exxon Mobil Corp. (XOM) remains the largest U.S. oil company with market cap around $485 billion. Conoco Phillips has a market cap around $136 billion. However, I like the long term earnings estimate of COP better than XOM.
COP currently trades at about 12.7 times earnings, while XOM trades around 12.5 times earnings. However, the five year price to earnings growth estimate is what gets me excited (PEG Ratio = Price to Earnings Ratio / Annual Earnings Per Share Growth).
COP has an expected five year price to earnings growth ratio of 1.17, compared with XOM at 2.18. With very comparable gross margins (both over 33%), I like COP in terms of potential growth.
In my opinion, based on the numbers, COP will grow earnings faster than XOM, which will allow the stock to outperform its more mature counterpart.
Recommendation: buy shares of Conoco Phillips for the long haul
I am long Conoco Phillips