The market has spent the past few weeks obsessing over mega-cap momentum and every possible earnings season signal. Now, as it looks to next year, we are seeing some great opportunities emerge. While headlines chase the same “can’t-miss” trades, one quiet, yet operationally sound business, has been pushed to the sidelines, and its stock is now pricing in a future far worse than reality.

In this week’s Long Idea, we break down why this overlooked name may be one of the most compelling opportunities in the market right now. The company benefits from long-term global demand, generates and returns billions to investors, and is investing for future growth.

Best of all, the company’s stock remains priced as if its profits will permanently decline.

By leveraging the first real AI for investing, we identify these hidden opportunities and deliver them straight to clients’ inboxes.

We hope you enjoy this excerpt from our latest Long Idea report published this week, available to Pro and Institutional members. You can buy the full report a la carte here.

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This stock offers favorable Risk/Reward based on the company’s:

  • ability to profit from persistent oil & gas demand,
  • investments in future capacity and pipeline enhancements,
  • strong cash flow generation and high yield to investors, and
  • cheap valuation.

Global Oil Demand Persisting for Much Longer

It’s no secret that oil production, and demand, have grown substantially in recent years. However, the question about the pace of future demand growth looms large. Will efforts to “go green” and transition to cleaner sources of energy dramatically reduce oil demand around the globe in the near-to-mid-term? The latest projections from the International Energy Agency (IEA) show the answer is a resounding no.

In World Energy Outlook 2025, published November 2025, the IEA projects higher long-term global oil demand.

  • In the current policies scenario (CPS), which considers the policies and regulations already in place, demand for oil and natural gas grows through 2050.
  • In the stated policies scenario (STEPS), which considers energy policies that have been formally stated but not adopted, oil demand flattens “around 2030” while natural gas demand grows “into the 2030s”.

Figure 1 illustrates global oil demand historically, as well as the projected demand in the CPS and STEPs scenarios.

Figure 1: Global Oil Demand Forecast: 2010-2050

Source: IEA and New Constructs, LLC

Quality Fundamentals

The company has grown revenue and Core Earnings by 1% and 7% compounded annually from 2014 through the trailing-twelve-months (TTM) ended 3Q25. The company’s net operating profit after-tax (NOPAT) margin increased from 8% in 2014 to 14% in the TTM ended 3Q25, while the company’s return on invested capital (ROIC) improved from 10.4% to 11.0% over the same time.

Strong Cash Flows Support Distributions

The company paid out $31.8 billion in distributions from 2018 through 3Q25. Over the same time, the company generated a cumulative $32.1 billion (31% of enterprise value) in free cash flow (FCF), or more than enough to cover the distributions. See Figure 7.

Figure 7: Cumulative Free Cash Flow Since 2018

Sources: New Constructs, LLC and company filings

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