The conventional wisdom would say that a stock with low share value and falling revenues and earnings would not be a great buying proposition. But the conventional wisdom also said that nothing would replace the horse in transportation, and that Hillary Clinton would be President. Sometimes, it pays to look under the hood, and see what’s really driving events – or stock potentials.And that is what several Wall Street analysts have done. In three recent reports, these analysts have highlighted stocks that all show the same combination of features: A Strong Buy consensus view, a high upside potential, a high dividend yield – and a strongly depressed share price. The analysts point to that share price weakness as an opportunity for investors.We ran the tickers through TipRanks database to find out what made these stocks compelling.ConocoPhillips (COP)First on the list is ConocoPhillips, the world’s largest oil and gas production company, with over $35 billion in annual revenues, $7 billion in annual income, and a market cap exceeding $36 billion. ConocoPhillips is based in Houston, Texas, and has operation in 17 countries. Just under half of the company’s 2019 production came from the US.With all of that strength behind it, COP shares are down 46% year-to-date. The key is low oil prices, which are depressing earnings. In the second quarter, the company recorded a net loss per share of 92 cents. The loss comes on the heels of declines prices; COP’s crude oil realized an average price of $25.10 per barrel, down 61% year-over-year, and natural gas liquids brought in $9.88 per barrel equivalent, a 54% yoy decline. Top line revenues fell 55% to $2.75 billion.Despite the falling revenues and earnings, COP has kept up its dividend payment. The company raised the payment from 31 cents to 42 cents last autumn, and the recent quarterly payment, sent out in early September, marked four quarters in a row at that level – and 5 years of dividend reliability. At $1.68 per common share annually, the dividend yields 5.08%.JPMorgan analyst Phil Gresh notes ConocoPhillips’ solid balance sheet and free cash flow, and points out the company’s logical path forward.“COP announced its intention to buy back $1B of stock with cash on hand, which we think is an acknowledgement that management views the stock as being over-sold, even considering the commodity price environment. We tend to agree with this view… COP continues to have plenty of cash and short-term investments on hand to be opportunistic with its capital allocation,” Gresh opined.Accordingly, Gresh rates COP an Overweight (i.e. Buy), and his $49 price target implies an upside of 44%. (To watch Gresh’s track record, click here)Overall, the Strong Buy consensus rating on COP shares is based on 13 reviews, including 11 Buys and 2 Holds. The stock sells for $33.90 and has an average price target of $48.08, in line with Gresh’s. (See COP stock analysis on TipRanks)Baker Hughes Company (BKR)Next up is Baker Hughes, an oil field support services company. These are the companies that supply the tech needed to make oil well work. The exploration companies own the rights and bring in the heavy equipment, but it’s the support service providers who send in the roughneck drillers and the tools that complete the wells and keep them in operation. Baker Hughes offers technical services to all segments of the oil industry, upstream, midstream, and downstream.Providing an essential set of services and products has not protected Baker Hughes from the prevailing low oil prices. BKR shares have underperformed, and are down 48% year-to-date. The company’s earnings and revenue fell sequentially in both Q1 and Q2, with second quarter EPS turning negative at a 5-cent loss per share. Revenue fell 12% to $4.7 billion for the quarter.Like COP above, Baker Hughes has made a point of maintaining its dividend. The company’s dividend has been reliable for the past 21 year – an enviable record – and management has prioritized that reputation. The payment, of 18 cents per common share quarterly, annualizes to 72 cents and gives a robust yield of 5.6%.Writing from RBC, analyst Kurt Hallead sees Baker Hughes at the start of a new path forward.“BKR’s strategy is to shed its oil services skin and transition into a global Energy Technology company. As many industries aggressively pursue carbon reduction targets and increase spend on renewable energy, BKR’s plan is to lever its technology portfolio and position its core businesses for new frontiers, notably carbon capture, hydrogen and energy storage,” Hallead noted. “In our opinion, pivoting to Energy Technology from Oil Services will be key to maintaining relevancy with investors, ensuring long-term viability with customers and outperforming its peers. BKR’s strong balance sheet and FCF generation provide a firm foundation. BKR is the only Energy Technology Services company on both the RBC Global ESG Best Ideas list and the RBC Global Energy Best Ideas list,” Hallead concluded.Hallead is optimistic about the company’s ability to effect this transition, as shown by his $20 price target, suggesting an upside of 55%. (To watch Hallead’s track record, click here)Overall, Wall Street agrees with Hallead on BKR. Of 12 reviews, 9 are Buys and 3 are Holds, making the consensus rating a Strong Buy. The average price target is $20.27, implying an upside of 58% from the trading price of $12.86. (See BKR stock analysis on TipRanks)Enerplus (ERF)Last on our list is Enerplus, another exploration and production company in North America’s oil and gas market. Enerplus operates in the Marcellus shale of Pennsylvania, producing natural gas, in the Williston Basin of North Dakota and Montana, producing light oil, and in several oil assets in Western Canada. The company estimates 2020 average production of 89,000 barrels of oil equivalent per day. And with all that to back it up, this small-cap ($419 million) energy player has seen its stock fall 73% this year.A 45% drop in top-line revenue, and earnings falling to a net loss of 14 cents per share in Q2, haven’t helped, but the real culprit, as with the companies above, is the current low oil price regime. The COVID-19 pandemic hit energy producers from several directions at once: reduced demand as economic activity declined, disruptions to production as workers were placed under stay-home orders, and disruptions to trade networks for both of those reasons.And yet, through all of this, Enerplus has consistently paid out its monthly dividend. The payment is small – only 1 cent in Canadian currency, or slightly less than 1 cent in US money – but the stock’s share price is low, as well. As a result, the 9 cent (US) annualized dividend payment gives a fairly robust yield of 4.8%.Analyst Greg Pardy, of RBC, watches the North American oil industry – especially the Canadian segments – carefully, and he believes Enerplus sits in a strong position to weather a tough market. “Enerplus remains our favorite intermediate producer given its consistent operational performance and best-in-class balance sheet… Liquidity wise, Enerplus is in excellent shape… [and] essentially undrawn on its US$600 million bank credit facility. Following repayments in May and June, Enerplus has no further debt maturities in 2020,” the analyst cheered. In line with this optimistic assessment, Pardy gives ERF a C$5.00 (US$3.76) price target indicating an upside of 100% for the coming year. (To watch Pardy’s track record, click here)All in all, with an 8:1 split between Buy and Hold, Enerplus’ 9 recent reviews support the Strong Buy analyst consensus. The share price is $1.85, and the US$3.72 average price target suggests it has room for 97% growth in the year ahead. (See ERF stock analysis on TipRanks)To find good ideas for dividend stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.Disclaimer: The opinions expressed in this article are solely those of the featured analysts. Контент предназначен для использования только в информационных целях.
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