With shares of ConocoPhillips (NYSE:COP) trading around $62, is COP an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:
T = Trends for a Stock’s Movement
ConocoPhillips explores for, produces, transports, and markets crude oil, natural gas, natural gas liquids, liquefied natural gas, and bitumen on a worldwide basis. The portfolio includes assets in North America, Europe, Asia, and Australia; growing North American shale and oil sands businesses; a number of international development projects; and a global exploration program. Energy products and services are essential to consumers and companies across the globe. So long as crude oil and natural gas products continue to see high demand, look for companies like ConocoPhillips to see rising profits.
T = Technicals on the Stock Chart are Strong
ConocoPhillips stock has been coasting higher over the last several years. The stock is now trading near multi-year highs and looks to be ready to continue higher. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, ConocoPhillips is trading above its rising key averages which signal neutral to bullish price action in the near-term.
(Source: Thinkorswim)
Taking a look at the implied volatility (red) and implied volatility skew levels of ConocoPhillips options may help determine if investors are bullish, neutral, or bearish.
| Implied Volatility (IV) | 30-Day IV Percentile | 90-Day IV Percentile | |
| ConocoPhillips Options | 20.63% | 66% | 64% |
What does this mean? This means that investors or traders are buying a significant amount of call and put options contracts, as compared to the last 30 and 90 trading days.
| Put IV Skew | Call IV Skew | |
| June Options | Flat | Average |
| July Options | Flat | Average |
As of today, there is an average demand from call buyers or sellers and low demand by put buyers or high demand by put sellers, all neutral to bullish over the next two months. To summarize, investors are buying a significant amount of call and put option contracts and are leaning neutral to bullish over the next two months.
On the next page, let’s take a look at the earnings and revenue growth rates and the conclusion.
E = Earnings Are Decreasing Quarter-Over-Quarter
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Rising stock prices are often strongly correlated with rising earnings and revenue growth rates. Also, the last four quarterly earnings announcement reactions help gauge investor sentiment on ConocoPhillips’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for ConocoPhillips look like and more importantly, how did the markets like these numbers?
| 2013 Q1 | 2012 Q4 | 2012 Q3 | 2012 Q2 | |
| Earnings Growth (Y-O-Y) | -23.79% | -54.86% | -23.56% | -25.31% |
| Revenue Growth (Y-O-Y) | -8.90% | 2.52% | -9.62% | -14.16% |
| Earnings Reaction | 0.18% | -5.05% | 2.16% | -2.56% |
ConocoPhillips has seen decreasing earnings and revenue figures over the last four quarters. From these figures, the markets have had mixed feelings about ConocoPhillips’s recent earnings announcements.
P = Excellent Relative Performance Versus Peers and Sector
How has ConocoPhillips stock done relative to its peers, BP (NYSE:BP), Exxon Mobil (NYSE:XOM), Royal Dutch Shell (NYSE:RDS), and sector?
| ConocoPhillips | BP | Exxon Mobil | Royal Dutch Shell | Sector | |
| Year-to-Date Return | 7.92% | 4.25% | 6.07% | -1.78% | 4.13% |
ConocoPhillips has been a relative performance leader, year-to-date.
Conclusion
ConocoPhillips provides essential crude oil and natural gas products and services to companies and consumers worldwide. The stock has been steadily trending higher and is now trading slightly below all-time high prices. Over the last four quarters, earnings and revenue figures have decreased, which has produced mixed feelings among investors. Relative to its peers and sector, ConocoPhillips has been a year-to-date performance leader. WAIT AND SEE what ConocoPhillips does this coming quarter.
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