SQM - Better Buy: ConocoPhillips vs. Sociedad Quimica y Minera
2019 has been a great year for most stocks given that the S&P 500 is up over 20% year-to-date. Sociedad Quimica y Minera (NYSE: SQM) and ConocoPhillips (NYSE: COP) are not most stocks. ConocoPhillips is a leading exploration and production (E&P) company that has clawed back some of its losses but is still down around 5% for the year whereas Sociedad Quimica y Minera (SQM), a basic materials company specializing in lithium and specialty plants nutrition, is down around 30% for the year. But each stock yields over 3% -- and is involved in making money from a "next big thing" -- and now is a good time to determine which one is the better buy.
By now you've probably heard of the shale revolution, the result of unconventional hydraulic fracturing and horizontal drilling techniques that have led to the rise of United States energy independence. Shale gas and shale oil production have been around for decades, but only recently has the process of extracting hydrocarbons from these tight rock formations become cost-effective. As a result of improved efficiencies, many of the largest American E&P companies have allocated the majority, if not all, of their portfolios into U.S. shale gas and oil. Just like a stock portfolio, a heavy concentration into just a few investments can be risky, even if their prospects seem bright.
Image Source: Getty Images.