GrowthTurtle
Data Science PhD & IEEE Fellow, Ex-Two Sigma
ConocoPhillips looks cheap against its sales. At 5x mid-cycle sales, give or take 12%, fair value is $224.66-$285.93, leaving the $127.53 price 43% below the low end; it would be expensive only above $193. The view uses reported earnings and revenue estimates only, without fundamental work. x.comÂ
Exxon's stock is pricing the screen, not its sworn 8-K disclosure that Q2 earnings will be about $5 billion above Q1. The July 7 filing attributes $3.5-3.9 billion to higher crude and $3.3-4.1 billion to refining and chemicals, less about $1 billion of war disruption. Yet Exxon closed at $145.09, ten dollars below its war peak. x.com x.comÂ
Occidental Petroleum is mispriced at about 8.4x trailing earnings and an 8.7% free cash flow yield during an oil shock. Eight times earnings in an oil shock is not a valuation but a clerical error with a ticker symbol. Iran cannot beat the US Navy, so it is waiting out America's vote in 49 days, since Iran does not vote until 2028; owning Occidental beats hiding in Treasuries. x.comÂ
Oil majors such as Shell, BP, ExxonMobil and Chevron deserve their multiples because they have consistently generated 10%+ returns across complete energy cycles. They are integrated, now diversified, and control a key commodity for decades ahead. Investors will do fine if they hold for the long term. x.comÂ
EOG Resources is deeply undervalued on EV/EBITDA, a big discount given where oil prices are now, and the chart looks strong. x.comÂ
Oil producers and royalty companies such as Canadian Natural, Suncor, Freehold Royalties, Viper Energy and Obsidian Energy can make money without oil going higher, if prices stay elevated longer than the market expects, say through year end. Many are still valued on trailing free cash flow yields, realized prices and production rates, none of which reflect the current elevated spot price. x.comÂ
Baker Hughes looks about one-third too cheap, as its energy technology business is being thrown out with the oil-services selloff. Its energy portfolio is incredible. x.comÂ
Exxon Mobil and Chevron are among the highest-quality energy stocks and are long-term holdings, so a quarterly earnings decline is just noise while the thesis is intact. In cyclicals like energy, the approach is to buy only at the deepest cycle lows, never chase, and hold until the thesis permanently breaks. x.comÂ
Chevron and Exxon Mobil face capital strain after their hedging blew up. They may need to raise capital through sales or borrowing if they cannot cut costs, and are struggling to keep enough capital to sustain their dividend floor. x.comÂ
