NEW YORK (TheStreet) -- Warren Buffett sold out of independent oil and gas giant ConocoPhillips (COP - Get Report) this year. Could it be that the Oracle has made a mistake?

With ConocoPhillips exiting its refinery business in 2012, the company could be in a vulnerable position should oil prices stay low. That said, there is a strong bullish case for the firm and selling when it could be time to buy might be a rare Buffett misstep. ConocoPhillips stock price is down 35% since highs reached in July of 2014. 

As Buffett is known to say, "Be fearful when others are greedy and greedy when others are fearful." Perhaps it's time to be greedy when Buffett is fearful of ConocoPhillips. Here's the case.

David Peltier holds shares of ConocoPhilips in TheStreet's Dividend Stock Advisor. See what he's saying  for free during our Open House.

Buy Low, Sell High?

One of the most overused (and unhelpful) bits of financial wisdom that gets tossed around is to "buy low and sell high". If only it were that easy. When investing in oil stocks, it is better to be a contrarian. Buy when oil prices are low and sell when they are high. When oil prices fall, oil stocks suffer. When oil prices recover, oil stocks correspondingly boom. With oil now hovering under $50 per barrel after being over $100 per barrel, now is the right time to be purchasing oil companies in general, and ConocoPhillips in particular.

ConocoPhillips Is a Value Play

ConocoPhillips currently has a very strong 4.6% dividend yield and a price-to-earnings ratio of just 13.8. Looking at ConocoPhillips dividend yield and valuation ratios shows a company that appears to be undervalued. ConocoPhillips is currently trading at its highest dividend yield in over five years due to the company's rapid price decline.

Keep in mind, the long-term economic power of ConocoPhillips is unaffected. Oil prices rise and fall. When they rise, ConocoPhillips does well and makes enormous profits. In 2014 alone, the company made over $15 billion in cash flows from operations. When oil prices fall, ConocoPhillips' earnings fall. While earnings fall, the company does hasn't historically lost money - even at $50 per barrel oil prices. ConocoPhillips is still expected to generate at least $8 billion (and as much as $12 billion) in operating cash flow in fiscal 2015, even with low oil prices.

The company's stock is currently trading at around $63 per share. If oil prices recover, the company will very likely hit (and possibly surpass) its all time high share price of around $85 per share, set back in July of 2014, a potential 35% gain for patient investors. In the meantime, investors can reap the rewards of the company's 4.6% dividend.

But Is the Dividend Safe?

ConocoPhillips high dividend is very appealing for investors looking for current income, but is the dividend safe? ConocoPhillips management has been very clear that its priority is to continue paying dividends despite low oil prices.

ConocoPhillips currently has over $5 billion in cash on hand. In 2014, the company paid out $3.5 billion in dividends to shareholders. In addition, ConocoPhillips has a $6 billion credit facility it can use to raise more cash if needed. In total, ConocoPhillips is expecting capital outlays of around $15 billion in full fiscal 2015 from dividends ($3.5 billion) and capital expenditures ($11.5 billion). Even with low oil prices throughout 2015, ConocoPhillips will have enough funds from cash, credit, and operating cash flows to fund both its dividends and its planned capital expenditures. Beyond 2015, the company is at risk of reducing its dividend if oil price stay low.

Possible Long-Term Growth Catalyst

ConocoPhillip's CEO Ryan Lance spoke with the U.S. Senate this week in an effort to lift the 40 year ban on oil exports in the U.S. If the ban were lifted, Lance said, additional jobs in the U.S. energy sector would be created, and the growth prospects of U.S. oil companies would increase.

While it is unlikely the ban is lifted anytime soon, the fact that the U.S. senate is even discussing the matter shows a big shift. With the U.S. economy growing slower-than-expected since the Great Recession, lifting the ban on oil could help boost the U.S. economy.

The Bottom Line

Oil prices have risen and fallen before; this is nothing new. The decline in oil prices have created an opportunity for patient investors to pick up high quality stocks like ConocoPhillips at a discount. ConocoPhillipshas paid steady or increasing dividends since 1982 (tracing back its corporate history through various mergers). This is not the first time ConocoPhillips has faced low oil prices, and come through with its dividend intact.

The company's combination of a long dividend history, high dividend yield, and low price-to-earnings ratio make it a favorite of The 8 Rules of Dividend Investing. The company is a buy for investors who are willing to take some risk for superior returns. If oil prices increase or the ban on U.S. oil exports is lifted, ConocoPhillips stock price will likely see very strong gains.  For an alternate perspective on TheStreet, see this article.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.