בס״ד

ConocoPhilips Now Offering 1823%… And You’re Gonna Turn Up Your Nose? (COP)

Posted on April 28, 2022

With the market making increasingly large intraday moves, we expect a volatility event in the coming weeks.

And what does that mean?

Essentially, that we’re about to face an uncontrollable surge on the part of the major market averages that will create liquidity outages and/or ‘spread failures’ on the trading floor.

A ‘spread failure’, for the uninitiated, is a condition that strikes infrequently.  Most often in the midst of a steep selloff, a ‘spread failure’ means traders simply cease offering a bid/ask spread on a security.

It means, in essence, that the market has broken.

We’ve heard many stories of this sort, though we’ve seen it only once, back in October, 2008.

We were looking to close and couldn’t find numbers anywhere.

They didn’t exist.

Until the selling had calmed and the market (and that particular stock) had bounced somewhat, there was nothing to do; no spreads to be seen.

And that’s not right.

With that in mind, we’re now turning to oil and gas giant ConocoPhilips (NYSE:COP) to buttress our fortunes.

Because not only is oil about to spill, but the majors, too, are headed for the tar pit.

Fundamentals

  • COP sports a P/E of 15.34, with analysts expecting that to contract to just 9.66 in the coming year (forward P/E).  So, either earnings grow by 50% or price declines by a third.  Take your pick.
  • Incidentally, consensus sees next year’s EPS contracting by 16.62%, so that should help you figure what kind of bomb COP is facing over the next twelve months.
  • Dividend Yield is a spotty 1.53%,
  • Price to Book is 2.70, and
  • Insiders shucked 23.86% of their holdings in the last half year – $38 million worth (with $25 million dumped in just the last eleven weeks).

Now look at the chart –

Full profits (1823%) are achieved with a decline of just 5.4%.

This looks like a swim in the pond, folks.

Barring any unforeseen oil slick.

.ה’ מלך. ה’ מלך. ה’ ימלוך לעולם ועד

Many happy returns,

Matt McAbby

 

Leave a Reply

Your email address will not be published.