ConocoPhillips (NYSE:COP) has been one of the hottest oil stocks in the sector over the past year. Shares of the U.S. oil giant are up an eye-popping 57% over that time frame, adding $26 billion to its market cap. That's a significantly higher return than most other oil stocks, which are only up by a mid-teens rate on average.

Shares might not be done going higher. That's certainly what a couple of analysts believe, which is why they upgraded the stock this week. Here's why they think it's still a great buy.

Close-up of the word buy written on wooden blocks.

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A big list of reasons to buy

BMO Capital initiated coverage on ConocoPhillips this week with an outperform rating and a $78 price target, implying about 10% upside from the current price. BMO cited several reasons why it sees shares continuing to head higher.

First, BMO sees the company becoming a cash flow machine in the coming years. It believes ConocoPhillips can generate $6.4 billion in free cash flow this year and $6.3 billion in 2019. That excess cash increases the likelihood that ConocoPhillips can continue buying back shares and raising its dividend. The oil giant already repurchased $3 billion in stock last year and is on pace to buy back another $2 billion this year, with plans to repurchase $1.5 billion more in 2019 and 2020. Meanwhile, the company raised its dividend 7.5% earlier this year. In BMO's view, ConocoPhillips has a clear line of sight to continue returning more cash to shareholders through at least 2022.

BMO also likes ConocoPhillips' diversification compared to other oil producers. The company has one of the best positions in the Bakken shale, as well as top-tier liquefied natural gas and oil sands assets, which should generate significant free cash flow in the future.

Finally, BMO noted that ConocoPhillips' valuation looks attractive versus peers on several levels including dividend yield, EV/EBITDA, price to earnings, and free cash flow yield. The company's CFO certainly agrees with that assessment after stating on the last quarterly conference call that "we think our stock is well undervalued and has a lot of upside to it."

Diversification insulates it from this growing problem

Bernstein upgraded ConocoPhillips' stock from market perform to outperform while setting an $82 price target, which implies roughly 16% upside from here. One of the big drivers was the company's diversified global portfolio, which will insulate it from the pipeline problems plaguing producers in the Permian Basin.

ConocoPhillips' global portfolio is proving to be a big competitive advantage because 70% of its oil production sells at Brent pricing, which is the global oil benchmark. Currently, Brent fetches more than $75 per barrel, while WTI, the U.S. benchmark, sells for $10 less a barrel. In the meantime, due to the lack of adequate pipeline takeaway capacity in the Permian, oil in that region currently sells for less than $60 a barrel, thereby pinching producer profits. That lower oil price is much less of a concern for ConocoPhillips, according to Bernstein, since it only gets 4% to 5% of its production from the Permian whereas pure-play Permian producers like Concho Resources (NYSE:CXO) only produce from that region. That's why Bernstein downgraded Concho's stock from outperform to market perform while slashing its price target from $180 a share all the way down to $130.

Aside from its global portfolio, Bernstein also noted that ConocoPhillips has a better free cash flow yield compared to other oil companies. Further, it liked the fact that ConocoPhillips is a low-cost producer and can maintain its current production rate even if crude tumbled back to $40 a barrel.

The one factor that sticks out the most

Both analysts make solid cases for buying ConocoPhillips' stock even after its big run up over the past year. However, the one thing that stands above all others is its valuation, which is toward the low end of its peer group even after its big run-up over the past year. Because of that, the company can create meaningful value for shareholders from here by continuing to plow a large portion of its free cash flow into buying back its cheap shares. That's why I think these analysts have it correct that this oil stock is still a great one to buy.

Matthew DiLallo owns shares of ConocoPhillips. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.