We recently compiled a list of the Top 10 Stocks to Buy According to Eagle Capital Management. In this article, we are going to take a look at where ConocoPhillips (NYSE:COP) stands against the other stocks.

Eagle Capital Management, a New York-based hedge fund, was founded in 1988 by Beth and Ravenel Curry. Their son, Ravenel Boykin Curry IV, joined the firm around the early 2000s after managing a portfolio at Kingdon Capital and is currently a key partner. A Yale University graduate with an Economics degree and an MBA from Harvard Business School, he plays a pivotal role in the firm’s strategy. Historically, Eagle has outperformed major benchmarks, including the broader market and the Russell Value Index. Over five years, Eagle delivered a 5.7% return versus the market's 2.4%, and since its inception, it has generated a cumulative return of 2,031%, significantly surpassing both indices.

Eagle Capital Management adheres to a disciplined investment philosophy centered on identifying undervalued companies with unrecognized long-term growth potential. The firm employs a fundamental, bottom-up research approach, focusing on the key drivers of long-term value creation. By maintaining an extended investment horizon, Eagle Capital is able to take a distinctive perspective on industry and company trends. The firm’s investment strategy prioritizes businesses with two essential characteristics: strong underlying assets capable of generating cash flow and sustaining value even in challenging market conditions, and transformative changes within the company that remain unrecognized by the broader market yet are likely to drive future growth. This approach aims to provide downside protection during market downturns while positioning the portfolio for enhanced returns as these changes materialize. These core principles have been integral to Eagle Capital’s strategy since its founding, forming the foundation of its competitive advantage and contributing to its consistent market outperformance since 1988.

Moreover, Eagle Capital Management follows a value-oriented investment strategy with a long-term perspective, assessing price in relation to intrinsic value rather than relying solely on traditional valuation metrics like price-to-earnings or price-to-book ratios. The firm’s investment team focuses on long-term prospects, particularly beyond five years, analyzing business growth, industry dynamics, and margin potential while identifying opportunities that the broader market may overlook. A key component of Eagle’s strategy is maintaining a “Margin of Safety,” achieved through valuation discounts, business resilience, growth potential, and strong, experienced leadership.

The firm concentrates its portfolio on high-conviction investments, typically holding 25-35 stocks. As of Q4 2024, it holds over $27.4 billion in 13F securities, and its top ten positions account for 57.62% of its portfolio. This approach allows Eagle to focus on asymmetric risk opportunities, ensuring that its top positions offer significant upside potential while maintaining strong downside protection. Adopting a private equity-style approach to public equity investing, Eagle builds positions in high-quality businesses with sustainable returns and durability. A rigorous due diligence process precedes any investment decision, and the firm leverages direct access to senior management at portfolio companies to gain deeper insights into long-term strategies, enabling decisive action when the right opportunities emerge. Since its inception, Eagle has consistently applied the same investment philosophy, aiming to generate superior returns through rigorous valuation analysis and a long-term perspective. The firm’s long-term investment horizon allows it to take a differentiated approach to market trends, focusing on businesses undervalued relative to their intrinsic earnings power.

Our Methodology

The stocks discussed below were picked from Eagle Capital Management’s Q4 2024 13F filings. They are compiled in the ascending order of the hedge fund’s stake in them as of December 31, 2024. To assist readers with more context, we have included the hedge fund sentiment regarding each stock using data from 1,008 hedge funds tracked by Insider Monkey in the fourth quarter of 2024.

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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

An underground network of pipelines transporting oil through an expansive terrain.

ConocoPhillips (NYSE:COP)

Number of Hedge Fund Holders as of Q4: 86

Eagle Capital Management’s Equity Stake: $1.95 Billion 

ConocoPhillips (NYSE:COP) reported Q4 2024 earnings of $2.3 billion, or $1.90 per share, surpassing analyst estimates but falling significantly short of $3.0 billion, or $2.52 per share, reported in the same period the previous year. Full-year earnings also declined from $11.0 billion in 2023 to $9.2 billion in 2024. However, production levels exceeded guidance, driven by strong performance from Lower 48 operations, which saw a 5% year-over-year increase. The recent Marathon Oil acquisition by ConocoPhillips is yielding benefits, with the company forecasting a capital expenditure of under $13 billion for 2025, down from the combined $13.5 billion in 2024. Despite the positive forecast, analysts downgraded COP from a Strong Buy to an Outperform rating, while also reducing the stock’s price target from $157 to $124.

Despite the downgrade, analysts still consider ConocoPhillips (NYSE:COP) one of the most efficiently managed exploration and production companies, with an attractive valuation based on discounted cash flow and multiple analysis. The change in rating reflects the lack of a near-term growth catalyst rather than concerns over the company’s long-term fundamentals. While the company’s global asset portfolio remains strong, the absence of immediate drivers for significant stock appreciation has led to a more cautious stance.

A pure-play oil and natural gas producer, ConocoPhillips (NYSE:COP) has had a significant surge in production for Q4 2024, reaching 2.18 million barrels of oil equivalent per day, largely driven by its $22.5 billion acquisition of Marathon Oil. This consolidation reflects a broader industry trend toward efficiency, but despite expansion, the company’s stock has declined 10% over the past two years, highlighting a disconnect between growth and shareholder returns. With Brent crude prices projected to drop to $74 per barrel and supply expected to outpace demand, market volatility remains a key concern. Despite uncertain conditions, ConocoPhillips maintains efficiency with a production cost of $19.18 per barrel, ensuring profitability and strong dividends.

Diamond Hill Large Cap Strategy stated the following regarding ConocoPhillips (NYSE:COP) in its Q2 2024 investor letter:

“Other bottom contributors in Q2 included CarMax, Target Corporation and ConocoPhillips (NYSE:COP). Shares of oil and gas exploration and production company ConocoPhillips declined against a backdrop of lower oil prices in Q2, as well as concerns about the expensive though strategically sound acquisition of Marathon Oil.”

Overall COP ranks 2nd on our list of the stocks to buy according to Eagle Capital Management. While we acknowledge the potential of COP as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. 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 the cheapest AI stock.

READ NEXT: 20 Best AI Stock To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap

Disclosure: None. This article is originally published at Insider Monkey.