Cyclical companies aren't for the faint of heart or bad of timing. But darn if it doesn't feel good to own them when they crest. Case in point: investors in oil major ConocoPhillips (NYSE:COP) have been riding high all year, reaping 48% returns on their stock and leaving the rest of the S&P 500 in the dust. In all likelihood, tomorrow's early morning Q4 and full-year 2005 earnings report will just add fuel to the good news fire.

Wall Street wisdom:

  • General consensus. Nineteen analysts follow Conoco, and they're by and large a bullish lot. Eleven rate the company a "buy," with the rest saying "hold."
  • Revenues. There's two ways to make your sales soar: Sell more stuff, or sell it for higher prices. Own a car? Then you can guess which one helped Conoco to boost sales by 24% last quarter.
  • Earnings. Need another hint? Analysts think the company earned 49% more profit this quarter than last.

Margin watch:
Conoco's margins are a thing of beauty (until you realize these profits are coming out of your wallet). Gross margins may be declining, but on the lines that really count -- operating and net margins -- it's up, up, and away.

Margins %

6/04

9/04

12/04

3/05

6/05

9/05

Gross

33.4

32.7

31.7

31.2

30.2

29.2

Op.

11.5

11.8

12.6

13.4

13.8

14.4

Net

6.1

6.3

6.8

7.5

7.7

8.2

All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ending in the named months.

Valuation metrics:
Here's where things get surreal. Conoco's stock in trade -- oil -- is more in demand than it's ever been before, and fetching historically high prices. Yet the company's P/E is a mere 7.5! Kind of strange when you consider that competitors like ExxonMobil (NYSE:XOM), BP (NYSE:BP), Chevron (NYSE:CVX), and Amerada Hess (NYSE:AHC) all sport P/Es in the (admittedly low) double digits.

At these prices, might Conoco be a relative bargain? It gets a Fool to wondering.

Fool contributor Rich Smith does not own shares of any company named above.