ConocoPhillips (COP) verses Chevron (CVX) verses ExxonMobil (XOM).COP’s market cap = 109 billion, trading at a trailing PE of 6.1, dividend yield = 2.2%CVX’s market cap = 147 billion, trading at a trailing PE of 9.2, dividend yield = 3.2%.XOM’s market cap = 419 billion, trading at a trailing PE of 11, dividend yield = 1.8%.The question that an investor should ask is whether COP is the best out of the threecompanies. On the surface COP looks very attractive. The stock is trading at a lowmultiple (6.1) and is paying a nice dividend. However further analysis reveals a slightlydifferent and somewhat complicated picture.Fundamentals: (from our proprietary research/analysis)
COP = 109% (enables future production growth)CVX = 58% (not good at all, hampers future growth)XOM = 105% (enables future production growth)
Reliance on U.S. Economy:
COP = 73%CVX = 45%XOM = 31%(Should a slowdown occur in U.S. consumption COP more likely to take a hit than XOMor CVX.)
2006 & 2007 Earnings Growth:
COP, 2006 = 25% & 2007 = 13%(Recent Q2 results are momentarily better due to BR acquisition accountingmanipulations. We see oil remaining high but natural gas at 6.60 -7.70 for Q4)CVX, 2006 = 19% & 2007 = 1%XOM, 2006 = 18% & 2007 = 6%Russian Roulette:All those familiar with the Yukos travesty know that Vladimir Putin can not be trusted toabide by international standards of commerce. The entire dismantling of Yukos was dueto mafia style politics; essentially someone got on Putin’s wrong side. This is factuallyconfirmed from the current events. Yukos could have done exactly what the Russiangovernment is doing now; sell off assets and pay off the (alleged) tax bill and still be aviable business. This is the true litmus test proving that what Putin has done is nationalize private assets under the guise of capitalism only to find some new suckers that pray thatthe (elected) dictator won’t do the same again. If the prayers become the prey it servesthem right. Not to mention that the Russian government (Putin’s circle of ten) is pocketing all of the proceeds and leaving Yukos shareholders out to dry. We call thisdormant disease Putinitis. The question is when will the next outbreak occur? The marketcurrently assesses a high risk premium on Lukoil.