Smart acquisitions have catapulted ConocoPhillips (COP
) into third place among U.S. energy companies, up from 10th some seven years ago. Consider the $7.5 billion it paid in 2005 for a 20% stake in Russia's Lukoil. The deal vastly expanded ConocoPhillips' international reach, and the original investment is now worth $12 billion. Last year the company's $36 billion purchase of Burlington Resources for its natural gas assets wasn't as well received by investors or analysts, but this deal may also prove lucrative--especially if the summer is as much of a scorcher as the experts predict. "If the forecasts are correct, we could be looking at tremendous demand for natural gas," says Bernard Picchi of researcher Wall Street Access. Picchi, who has a "conservative" 85 target a year from now for the 77.35 stock, says the company will also generate $10 billion in cash through 2012. "The goal this year is to pay down debt and focus on buybacks," adds Philip Weiss of Argus Research, who has a price target of 82. "I like management's focus."Note: Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them. Gene Marcial is on vacation.