Be Cautious on ConocoPhillips


Casey Hoerth

 | Jun 25, 2014 | 11:00 AM EDT
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ConocoPhillips (COP) has had a great, two-year run, but now it's time to get cautious on the stock. Since spinning off its refining arm in June 2012, the shares of ConocoPhillips have gone from the mid-$50 range to just about $85 as of the beginning of last week. When one factors in the dividends, which represented a yield of over 5% in 2012, this major oil company's ascent has been remarkable.

Both improving margins and increased production drove Conoco's outsized returns. Conoco was (and is) able to attain this potent combination by divesting lower-margin assets in far-flung geographies and then investing the proceeds in to North American shale and Canadian oil sands, both of which offer higher margins and, at the moment, better growth prospects. These prudent investment decisions, coupled with the fact that Conoco was seriously undervalued compared to its U.S. big oil peers at the time, led to remarkable gains over the last two years....467 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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