In this article, we are going to discuss the 10 cheap energy stocks to buy now.
The energy sector breathed a huge sigh of relief this week, following a surprising truce between the United States and China to drastically roll back tariffs on each other’s goods for an initial period of 90 days. The two countries are the largest oil consumers in the world, representing over 30% of global oil consumption. As a result, global crude prices shot up, with the West Texas Intermediate (WTI) price currently hovering just below $63 per barrel, up from a multi-year low of $57.13 it hit last week. That said, crude oil’s upside potential remains limited because of its abundant supply, especially after a recent decision by OPEC+ to further raise output in June.
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Despite the recent uptick, crude oil remains below the $65 break-even mark for most producers operating in the prolific Permian Basin in the US, forcing them to potentially stop drilling and cut jobs. As a result, for the first time in over a decade, US crude oil production is projected to decline in the coming year, despite the repeated calls by President Trump to ‘drill, baby, drill’. The tariffs on steel and aluminum have also raised costs for oilfield operators, further reducing margins for the industry.
However, in spite of the bleak market outlook and plunging prices, a number of major oil and gas players have reported better-than-expected results over the last couple of weeks. Though several of these companies have cut back on capital expenditure given the current market conditions, shareholder returns remain strong. A number of oil supermajors are sticking to their commitments to return billions of dollars in dividends and share repurchases, even if they have to resort to borrowing for the time being.
Oil and gas companies have historically been strong dividend stocks. However, given the tough outlook for crude oil, their largest source of revenue, they will have to build up on other means of income to maintain such high levels of payouts. A significant opportunity has recently emerged in the form of liquified natural gas, or LNG.
According to a London-based industry supermajor, the global demand for LNG is estimated to surge by around 60% by 2040, driven largely by economic growth in Asia, the ongoing AI boom, and efforts to cut emissions in heavy industries and transportation. Countries like China and India are investing heavily to increase their LNG import capacity and gas-related infrastructure to meet rising demand.
The United States of America is already the top LNG exporter in the world, with a record 11.9 billion cubic feet per day of outflows in 2024. These numbers are now expected to receive a significant boost after the Trump administration lifted the moratorium on new LNG export permits, and several new export facilities are set to come online this year. As a result, the US Energy Information Administration has projected the country’s LNG exports to 15.2 bcfd in 2025.
Europe remains the top destination for American LNG, accounting for over 75% of total orders this year. China, being the top importing country of LNG in the world, is also a big potential market. However, due to the ongoing tariff war, Chinese imports of American LNG have come to a halt. According to commodity analysts Kpler, no cargoes of American LNG have arrived at Chinese ports since February. That said, this could be an important talking point between the two countries as they try to normalize their relationship and revive trade.
With that said, here are the Cheapest Energy Stocks to Buy Right Now.
Our Methodology
To collect data for this article, we looked for companies operating in the energy sector with forward P/E ratios of below 11 as of the close of May 11, 2025. Then, we identified companies that have delivered returns of at least 50% over the last five years, in order to steer clear of potential value traps. Moreover, to make sure we keep our list relevant, we have only shortlisted companies with a market cap of $10 billion or above. The following are the Most Undervalued Energy Stocks to Buy Now.
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10. Diamondback Energy, Inc. (NASDAQ:FANG)
Forward P/E Ratio as of May 11: 10.79
Diamondback Energy, Inc. (NASDAQ:FANG) is an independent oil and natural gas company, focused on the acquisition, development, exploration, and exploitation of unconventional, onshore oil and natural gas reserves in West Texas.
Diamondback Energy, Inc. (NASDAQ:FANG) completed its $26 billion merger with Endeavor Energy Resources last year, making it the third-biggest oil producer in the Permian and the sixth biggest in the continental US. As a result, the company reported a staggering 84.5% YoY jump in Q1 2025 production to 850,656 barrels of oil equivalent per day (boe/d). Diamondback’s revenue also grew by almost 82% YoY to $4.05 billion, beating expectations by $294.25 million. Moreover, the higher output and a jump in natural gas prices helped Diamondback post an adjusted EPS of $4.54 in the first quarter, topping estimates of $4.2.
Diamondback Energy, Inc. (NASDAQ:FANG) maintains a strong balance sheet, with its net cash provided by operating activities coming in at $2.4 billion in the first quarter. The company generated an adjusted free cash flow of $1.6 billion, of which it returned approximately 55% to its shareholders in the form of stock repurchases and dividends. FANG recently declared a quarterly cash dividend of $1 per share and currently boasts an annual dividend yield of 3.8%, putting it among the 10 Energy Stocks with Fat Dividends.
9. ConocoPhillips (NYSE:COP)
Forward P/E Ratio as of May 11: 10.78
ConocoPhillips (NYSE:COP) is one of the largest independent E&P companies in the world based on oil and natural gas production and proved reserves.
ConocoPhillips (NYSE:COP) significantly bolstered its footprint with the $22.5 billion acquisition of Marathon Oil last year, adding over 2 billion barrels of low-cost oil and gas resources to its portfolio. As a result, the company’s Q1 2025 production stood at 2.38 million barrels of oil equivalent per day (mmboed), up 487,000 boepd from a year earlier. COP’s revenue also jumped by over 18% YoY to $17.1 billion, well above expectations by almost $1.2 billion. The energy firm’s adjusted profit came in at $2.09 per share, beating estimates by $0.04. ConocoPhillips reported an operating cash flow of $5.5 billion during the quarter and distributed $2.5 billion to shareholders. The company is known for its commitment to shareholders, boasting a streak of 10 consecutive years of dividend growth.
Given the tough economic outlook threatening the global oil industry, ConocoPhillips (NYSE:COP) has announced to reduce its FY 2025 capital budget by $450 million to $12.3 billion-$12.6 billion, but ensured that it would have no impact on its production levels.
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