Warren Buffett owns ConocoPhilllips: ...
Home  »  Community News  »  Warren Buffett owns ...
Jonathan Yates
Warren Buffett owns ConocoPhilllips: Should You?

[pwal id=”34231867″ description=”COP”][/pwal]

It is tough to argue with success, particularly when it is the investing acumen and record of Warren Buffett, considered by many to be the greatest investor of all time.  Worth over $50 billion, the great majority of it the result of savvy investing, Buffett focuses his efforts and funds on basic stocks that have wide economic moats that protect the franchise of the business over time from competition.  A major holding of Warren Buffett for the portfolio of Berkshire Hathaway (NYSE: BRK-A) is ConocoPhillips (NYSE: COP).

A major oil and natural gas company, ConocoPhillips has a wide economic moat in that those seeking to enter the energy sector are confronted by massive financial, regulatory, and political obstacles.  For a major oil and natural gas company to flourish, billions are required for the exploratory, production and marketing needs.  Even if the necessary financing can be obtained, the regulatory and political aspects are daunting, too.  That is why many oil and natural gas companies are state-controlled.

In addition to a broad economic moat, ConocoPhillips has the cash flow that Buffett seeks in an investment.  Sales are up on a quarterly basis.  From the capital generated from the cash flow, ConocoPhillips is able to pay its shareholders a very health dividend of 4.39%, which is also favored by Buffett.  ConocoPhillips also has a tradition of increasing the size of the dividend it pays to its shareholders.

The technical indicators certainly support the decision of Buffett to accumulate shares of ConocoPhillips for the portfolio of Berkshire Hathaway (NYSE: BRK-A).  Up 4.81% for 2013, the candlestick patterns of ConocoPhillips are presenting very positive trends for the month of March as shown by the chart below.  ConocoPhillips is trading above its 20-day, 50-day, and 200-day moving averages, so momentum traders are doing well.  For value investors, the price-to-earnings ratio is just 10.17 and projected to fall to 9.93.  Growth investors should like the growth rate this year of 15.19%.

Now trading around $60 a share, the mean analyst target price over the next year for ConocoPhillips is $64.93.

Share on StockTwits

Leave a reply

Your email address will not be published. Required fields are marked *

2 trackbacks