Looking for a bargain? Bank of America suggests 3 value stocks to consider

Every buyer wants to find a good deal. It’s one of the pleasures we experience when we’re looking to buy something. Finding what we want for less than we planned to spend is always a bit of a thrill. And that’s true of the stock market, too. That’s the appeal of value stocks.

The value stock segment, which is typically priced below what its underlying strengths suggest, has lagged growth stocks so far this year, according to Bank of America. Savita Subramanian, the bank’s research and quant strategist, describes value stocks as “overlooked and trading at very low multiples,” and points to several sectors, including energy valuesas a place where value-minded investors can look for opportunities.

Kalei Akamine, a Bank of America equity analyst and Subramanian’s colleague, took that stance and took a closer look at three bargain-basement energy stocks. All three are in the S&P 500 value index, and according to Bank of America, they’re value stocks to consider right now.

According to TipRanks According to the database, Wall Street’s overall view of these picks is clear: They are rated “buy” and offer solid double-digit upside potential. Let’s dig into the details and find out why Bank of America believes they are compelling portfolio picks.

ConocoPhillips (COP)

We’ll start with ConocoPhillips, one of the world’s largest independent oil and gas exploration and production companies. With a market capitalization of $131 billion, ConocoPhillips oversees a global operation from its base in Houston, Texas. The company has operations in North America, Europe, Africa, the Middle East, and the Asia-Pacific region.

Taking a step back, ConocoPhillips is deeply involved in the production of most forms of fossil fuels. The company’s operations include all phases of the discovery, development, transportation, and distribution/marketing of hydrocarbon fuels and other products, including crude oil, natural gas, natural gas liquids, liquefied natural gas (LNG), and bitumen, also known as natural asphalt. ConocoPhillips maintained average daily production last year of 1,826,000 barrels of oil equivalent and, as of December 31, claims approximately 6.8 billion barrels of oil equivalent of proved reserves in its landholdings and operating areas. The company’s largest crude oil and natural gas producing region was the Lower 48 of the United States.

For yield-conscious investors, this company maintains a strong commitment to returning capital to shareholders. In 2023, the company returned $11 billion to shareholders, consistent with its policy of returning more than 30% of its operating cash.

The story continues

In its most recently reported quarter, the first quarter of 2024, ConocoPhillips posted sales and operating income of $14.5 billion. This was more than $480 million below guidance and was based on total production for the quarter of 1,902 MMboe/d. The company reported net income of $2.03 per share in 2020.