Can This Surging Oil & Gas Stock Stay Hot?

COP has chart support in place, too

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Oil & gas ConocoPhillips (NYSE:COP) doesn't get the recognition that household blue-chips Exxon Mobil (XOM) and Chevron (CVX) get. But, two weeks removed from a record high, is the stock still a 'buy' for investors?

ConocoPhillips stock is up 91% year-over-year. Along the way, the shares' ascending 40-day moving average has contained the steeper pullbacks. Moreover, the oil company offers a dividend yield of 1.38% with a forward dividend of $1.42.

COP Stock Chart

From a fundamental point of view, ConocoPhillips stock provides very little long-term security due to its weak balance sheet and inconsistent growth rate. COP currently has $6.59 billion in cash and $20.6 billion in total debt. Furthermore, the oil company previously reported consecutive years of revenue declines between fiscal 2018 and fiscal 2020, decreasing by a total of 48% during that period. COP also reported a $9.9 billion decrease in net income for fiscal 2020. However, for fiscal 2021 ConocoPhillips’ revenues grew a massive 144% and their net income increased by about $10.7 billion, up from $2.7 billion in net losses for fiscal 2020.

Nonetheless, ConocoPhillips stock has likely already seen the majority of its growth in the short-term, with its price-sales ratio of 2.91 and forward price-earnings ratio of 9.68 not indicating the best values for a company expected to see top and bottom-line declines in 2023. Although COP is expected to finish fiscal 2022 with 25.2% revenue growth and 81% earnings growth, the oil business’ revenues are estimated to drop by 9% and their earnings by 19% for fiscal 2023, making COP an unfavorable investment for fundamental-focused investors.

It's also worth noting the equity's Schaeffer's Volatility Scorecard (SVS) sits at 80 out of 100, suggesting COP has exceeded options traders' volatility expectations over the past year.

 

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