Is ConocoPhillips (COP) Among the Top Commodity Producers With the Highest Upside Potential?
On the other hand, Morgan Stanley, on February 21, highlighted that 2025 is anticipated to be a crucial year for commodity markets, influenced by supply fundamentals, inflation patterns, and dollar fluctuations. Inflation in the United States is still high, falling short of the Federal Reserve's 2% target in December with headline CPI readings of 2.9% and core CPI readings of 3.2%. After the U.S. presidential election, policy changes—particularly related to immigration, deficits, and tariffs—have raised inflation expectations. According to data from the University of Michigan, they rose from 2.8% to 3.3% in just one month. Commodity prices have generally been supported by these conditions.
'Commodity prices have whipsawed throughout the 2020s—plummeting with arrival of the COVID-19 pandemic, then surging to record highs after Russia's invasion of Ukraine, and then sinking again,' said Ayhan Kose, the World Bank Group's Deputy Chief Economist and Director of the Prospects Group. 'In an era of geopolitical tensions, surging demand for critical minerals, and more frequent natural disasters, that could become the new normal. Successfully navigating through repeated commodity prices swings will require developing economies to build fiscal space, strengthen their institutions, and improve investment climates to facilitate job creation.'
However, the World Bank's April 2025 Commodity Markets Outlook projects that global commodity prices will plummet, falling 12% in 2025 and further 5% in 2026 to their lowest level since 2020. The anticipated drop is being driven by slowing global economic growth and persistently high oil supply. This decline carries risks to economic growth in developing countries, with two-thirds likely to see setbacks, even though it may reduce short-term price pressures associated with rising trade barriers. Notwithstanding the drop, nominal prices will still be higher than they were before the pandemic.
The commodity market is booming. According to a research report, the size of the global commodity services market was projected at $3.56 billion in 2024 and is anticipated to grow at a compound annual growth rate (CAGR) of 8.65% from 2025 to 2034, from $3.87 billion in 2025 to roughly $8.16 billion by 2034. Regionally, the commodity services industry is dominated by North America, while Asia Pacific is projected to grow at a quick pace.
Commodity producer stocks are shares of publicly listed firms that produce, explore, or distribute commodities. These businesses are frequently interested in metals, mining, agriculture, and energy. Commodity producer stocks are chosen by investors to obtain exposure to both the equity and commodities markets, potentially profiting from heightened interest in either.
We recently compiled a list of the Top 15 Commodity Producers With the Highest Upside Potential . In this article, we are going to take a look at where ConocoPhillips (NYSE:COP) stands against the other Commodity Producer stocks.
Story Continues
Since late September, the U.S. dollar has risen by almost 8%, in part because of growing interest rates and policy expectations. Global demand for commodities is usually pressured by a strong dollar, but if the currency stabilizes or depreciates, it may eliminate a significant obstacle. Although recent contango suggests sufficient short-term supply, a yield-adjusted perspective reveals markets in backwardation at about 4%, showing ongoing physical tightness. This suggests that inventories for essential commodities remain low, making the market more susceptible to demand shocks. Commodity performance in 2025 is supported by tight supply, high inflation, as well as potential dollar weakness.
ConocoPhillips (COP): Among Billionaire Israel Englander's Stock Picks with Huge Upside Potential
An underground network of pipelines transporting oil through an expansive terrain.
Our Methodology
To collect data for this article, we examined companies operating in the commodity sector and then compiled a list of the stocks with the highest upside potential according to Wall Street analysts, as of May 1, 2025. To keep our list relevant, we have only included companies with a market cap of $10 billion and above. The following are the Commodity Producers with the Highest Upside Potential.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter's strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
ConocoPhillips (NYSE:COP)
Analysts' Upside Potential as of May 01: 37.28%
One of the largest independent exploration and production firms in the world by output and reserves, ConocoPhillips (NYSE:COP), generated 3.1 billion cubic feet of natural gas per day and 1.2 million barrels of oil and natural gas liquids per day in 2023, mostly from Alaska and the Lower 48 in the United States, Norway in Europe, and several countries in Asia-Pacific and the Middle East. At the end of 2023, proven reserves amounted to 6.8 billion barrels of oil equivalent.
It had a strong fourth quarter of 2024. The business reported $14.74 billion in revenue, almost $515 million more than anticipated. It exceeded forecasts by $0.15, with adjusted earnings per share of $1.98. ConocoPhillips (NYSE:COP)'s $22.5 billion purchase of Marathon in November 2024, which expanded its resource base by more than 2 billion barrels of oil and gas with an average supply cost of less than $30 per barrel, was a major highlight of the quarter. The company's output surged 14.8% year over year after this acquisition, hitting 2.183 million barrels of oil equivalent per day in the quarter.
ConocoPhillips (NYSE:COP) has a strong financial base, making it an attractive option for income investors. The company recorded $20.3 billion in total cash from operations over the previous year, including $20.1 billion in operating cash flow. It continued to distribute $3.6 billion in dividends, showing its dedication to shareholder returns. For the ninth consecutive year, the business increased its quarterly dividend by 34% to $0.78 per share in October.
Overall, COP ranks 5th on our list of the Top Commodity Producers With the Highest Upside Potential. While we acknowledge the potential of COP as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than COP but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
39 minutes ago
- Yahoo
Graham Corporation (GHM) Reports Q1: Everything You Need To Know Ahead Of Earnings
Industrial fluid and energy systems manufacturer Graham Corporation (NYSE: GHM) will be reporting results tomorrow before market open. Here's what to look for. Graham Corporation missed analysts' revenue expectations by 5% last quarter, reporting revenues of $47.04 million, up 7.3% year on year. It was a mixed quarter for the company, with a solid beat of analysts' EPS estimates but full-year revenue guidance slightly missing analysts' expectations. Is Graham Corporation a buy or sell going into earnings? Read our full analysis here, it's free. This quarter, analysts are expecting Graham Corporation's revenue to grow 13.4% year on year to $55.67 million, in line with the 14% increase it recorded in the same quarter last year. Adjusted earnings are expected to come in at $0.19 per share. Analysts covering the company have generally reconfirmed their estimates over the last 30 days, suggesting they anticipate the business to stay the course heading into earnings. Graham Corporation has missed Wall Street's revenue estimates twice over the last two years. Looking at Graham Corporation's peers in the engineered components and systems segment, some have already reported their Q1 results, giving us a hint as to what we can expect. Regal Rexnord's revenues decreased 8.4% year on year, beating analysts' expectations by 3%, and Arrow Electronics reported a revenue decline of 1.6%, topping estimates by 7.2%. Regal Rexnord traded up 13.6% following the results while Arrow Electronics was also up 3.6%. Read our full analysis of Regal Rexnord's results here and Arrow Electronics's results here. Investors in the engineered components and systems segment have had steady hands going into earnings, with share prices up 1.5% on average over the last month. Graham Corporation is up 16.5% during the same time and is heading into earnings with an average analyst price target of $52.67 (compared to the current share price of $42). Unless you've been living under a rock, it should be obvious by now that generative AI is going to have a huge impact on how large corporations do business. While Nvidia and AMD are trading close to all-time highs, we prefer a lesser-known (but still profitable) semiconductor stock benefiting from the rise of AI. Click here to access our free report on our favorite semiconductor growth story.
Business Insider
an hour ago
- Business Insider
TGT, CSCO, or DAL: Which Value Stock Could Offer the Highest Return?
Amid the ongoing macro uncertainty, value stocks could be an attractive addition to investors' portfolios. Value stocks trade below their intrinsic value, thus having the potential to outperform the market over the long term. These stocks are often undervalued relative to their fundamentals and growth potential. Using TipRanks' Stock Comparison Tool, we placed Target (TGT), Cisco (CSCO), and Delta Air Lines (DAL) against each other to find the value stock that could offer the highest return. Confident Investing Starts Here: Target (NYSE:TGT) Big-box retailer Target has been struggling to thrive due to intense competition, company-specific issues, and macro pressures. The company delivered disappointing results for the first quarter of Fiscal 2025 and lowered its full-year sales guidance, blaming tariff uncertainty, weak discretionary spending, and consumer backlash to the rollback of key DEI (diversity, equity, and inclusion) policies. Target has been losing market share to other retailers. It has greater exposure to discretionary items than groceries or essentials compared to rivals like Walmart (WMT). This is disadvantageous for Target, as consumers are cautious about their discretionary spending in a challenging macro backdrop. Currently, TGT stock trades at a forward P/E or price-to-earnings (adjusted) multiple of 13.2x, which is about 19.6% below the sector average. Is TGT Stock a Buy, Hold, or Sell? Recently, Guggenheim analyst John Heinbockel cut the price target for Target stock to $115 from $155, while maintaining a Buy rating, saying 'challenging fundamentals have prevailed over a modest valuation during the past year,' with the stock underperforming the S&P 500 (SPX) amid a 20% reset in 2026 EPS expectations. The 5-star analyst noted that the operating outlook for Target is uncertain due to the sequential pressure on comparable sales. That said, Heinbockel remains bullish on TGT stock due to its valuation, with the P/E multiple based on 2025 earnings appearing 'undemanding' at 13.2x, compared to nearly 16x a year ago. The analyst also highlighted TGT's dividend and potential buyback efforts, which together represent an 8% total shareholder return. Overall, Wall Street has a Moderate Buy consensus rating on Target stock based on 10 Buys, 20 Holds, and one Sell recommendation. The average TGT stock price target of $103.04 indicates about 6% upside potential from current levels. TGT stock is down 28% year-to-date. Target stock's dividend yield stands at 4.6%. Cisco Systems (NASDAQ:CSCO) Cisco stock has risen about 12% so far in 2025, as the networking and security solutions provider is expected to gain from artificial intelligence (AI)-led demand. The company recently delivered better-than-projected earnings and revenue for the third quarter of Fiscal 2025. Notably, Cisco reported more than $600 million in AI infrastructure orders from web companies, bringing the total for Fiscal 2025 to more than $1.25 billion. In fact, the company said that the figure surpassed the $1 billion mark a quarter ahead of its schedule. Also, Cisco's security products business is gaining from the $28 billion Splunk acquisition. In Q3 FY25, CSCO reported a 54% rise in its security products revenue to $2.01 billion. That said, the company lagged analysts' expectations for this business. Looking ahead, Cisco is focused on capturing further AI opportunities through continued innovation and strategic partnerships. The company is one of the U.S. tech giants that have partnered with Saudi Arabia's AI startup HUMAIN to offer AI tech. CSCO stock currently trades at a forward P/E (adjusted) multiple of 17.4x, which is about 23% below the sector average. Is Cisco a Buy or Sell Stock? Following the Q3 FY25 print, UBS analyst David Vogt reiterated a Hold rating on Cisco stock with a price target of $70. The 4-star analyst noted that the company modestly exceeded Wall Street's Q3 FY25 estimates, with stronger Networking growth driving the revenue beat while margin and EPS gained from a more favorable tariff backdrop than accounted for in the guidance and a lower tax rate. Vogt highlighted management's commentary about the strength in webscale demand being broad-based, with three of the top six webscale customers growing triple-digits. The company also mentioned its recent deals with Saudi Arabia and the UAE, indicating that the sovereign opportunity is an additional driver of its accelerating AI business. Despite the favorable AI trends and the acceleration in the core business, Vogt prefers to be on the sidelines, as he thinks that the improved performance is already priced into CSCO stock, which is trading at a P/E multiple of about 16x his FY26 EPS estimate of $4.00. With nine Buys and seven Holds, Cisco stock earns a Moderate Buy consensus rating on TipRanks. The average CSCO stock price target of $70.77 implies about 7.1% upside potential from current levels. CSCO stock offers a dividend yield of 2.4%. Delta Air Lines (NYSE:DAL) Delta Air Lines is one of the major carriers in the U.S. Despite rising about 14% over the past month due to easing tariff pressures, DAL stock is still down nearly 16% year-to-date on concerns of a slowdown in travel demand due to macro uncertainty. Back in April, Delta announced better-than-anticipated earnings for the first quarter of 2025, but pulled back its full-year outlook, saying that the tariffs under the Trump administration were weighing on bookings. At that time, Delta Air Lines said that international and premium travel, which have been growing faster than the coach cabin business, have been relatively resilient. At a forward P/E (adjusted) multiple of 9.41x, DAL stock trades at a 52% discount to the sector average. Is DAL Stock a Buy or Sell? Recently, UBS upgraded Delta Air Lines stock and rival United Airlines (UAL) to Buy from Hold, citing an improved international and premium travel demand, increased revenue expectations, and a stabilizing economic outlook. Analyst Thomas Wadewitz increased the price target for DAL stock to $66 from $46. The 4-star analyst stated that the upgrade follows the relief due to the 90-day agreement between the U.S. and China and framework with the U.K., which has shifted his base case from a potential downturn to 'stability / slow growth.' Also, based on recent commentary of the airlines, including a May 6 meeting with Delta, Wadewitz noted 'stability in demand in April and May.' He added that fare data indicates a 410 basis points year-over-year improvement for Delta and 180 basis points for United Airlines in April. UBS raised its 2025 earnings estimates for Delta from $5.05 to $5.64 per share. On TipRanks, DAL stock scores a Strong Buy consensus rating based on 13 Buys and two Hold recommendations. The average DAL stock price target of $60.93 implies about 20% upside potential. DAL stock offers a dividend yield of 1.2%. Conclusion Among the three value stocks discussed here, Wall Street is highly bullish on Delta Air Lines stock and cautiously optimistic on Target and Cisco. Analysts see higher upside potential in DAL stock compared to the other two value stocks. Wall Street is bullish on Delta Air Lines due to its solid execution, diversified revenue streams, and strong fundamentals.
Yahoo
2 hours ago
- Yahoo
Oil prices hold gains ahead of US-China trade talks
By Colleen Howe BEIJING (Reuters) - Oil prices held on to last week's gains early on Monday as investors waited for U.S.-China trade talks to be held in London later in the day. Brent crude futures were flat at $66.47 a barrel at 0008 GMT. U.S. West Texas Intermediate crude was trading up 1 cent at $64.59. The prospect of a U.S.-China trade deal supported prices as three of Donald Trump's top aides were set to meet with counterparts in London on Monday for the first meeting of the U.S.-China economic and trade consultation mechanism. The announcement on Saturday followed a rare Thursday call between the two countries' top leaders, with both under pressure to dial down tensions as China's export controls on rare earths disrupt global supply chains. Oil prices posted their first weekly gain in three weeks on the news. A U.S. jobs report showing unemployment held steady in May appeared to increase the odds of a Federal Reserve interest rate cut, further supporting last week's gains. Inflation data from China on Monday morning will give a reading of domestic demand in the world's largest crude importer. The economic data and the prospect of a trade deal that could support economic growth and increase demand for oil outweighed worries about increased OPEC+ supply after the group announced another big output hike for July on May 31. HSBC expects OPEC+ to accelerate supply hikes in August and September, which are likely to raise downside risks to the bank's $65 per barrel Brent forecast from the fourth quarter of 2025, according to a research note on Friday. Capital Economics researchers said they believe this "new faster pace of (OPEC+) production rises is here to stay".
