Oil stocks continue to make headlines after the removal of Venezuelan leader Nicolas Maduro. The U.S. government has made its intentions clear regarding how it plans to utilize the South American country’s oil resources.
Donald Trump has already stated that the oil will be sold at market price and that the revenue will be managed by the US. He has planned for oil companies to help rebuild Venezuela’s energy infrastructure, an investment that the President sees as a business venture, with the returns used for reimbursements of damages to the US as a result of narco activity against the US. In this regard, a meeting was held at the White House on January 9.
Another consequence of the above episode could be lower oil prices for the foreseeable future. On January 8, Exxon Mobil reported that its earnings could be significantly impacted. Analysts at Scotiabank are of a similar view, lowering estimates for the upcoming fourth quarter results of oil companies:
“However, we think many brokers, including us, have yet to mark to market, which could lead to lower earnings estimates given the lower oil and gas prices compared with expectations at the beginning of 4Q25”
In this scenario, we decided to examine the 10 cheapest oil and gas stocks to invest in, as this sector could remain in the limelight for the rest of 2026.
Our Methodology
To identify the 10 cheapest Oil and Gas stocks to invest in, we first compiled a list of all stocks associated with the oil and gas industry with a market cap of at least $2 billion. We then examined the forward P/E of the energy sector, which, according to various sources, was approximately 16.
To filter out the cheapest stocks, we restricted our list to the ones trading at at least a 25% discount to the sector’s average forward P/E of 16, as per Yahoo Finance data. We also ensured these stocks had an upside of at least 15%. The number of hedge funds holding these stocks is also included. The stocks are ranked in descending order of their forward P/E ratios.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 427.7% since May 2014, beating its benchmark by 264 percentage points (see more details here).
Note: All pricing data is as of market close on January 9, 2026.
10. Energy Transfer LP (NYSE:ET)
Forward P/E: 10.75
Potential Upside: 30%
Number of Hedge Fund Holders: 35
On January 7, Wells Fargo reaffirmed its Buy rating and price target of $23 for the stock. The price target suggests a further 36% upside from the current levels, which is consistent with the median Wall Street analysts’ upside of 30%.
On January 6, Energy Transfer LP (NYSE:ET) announced its plans to invest between $5 billion and $5.5 billion in growth capital during 2026. The majority of its investment is focused on the projects that strengthen and expand its natural gas network. These investments project consolidated adjusted EBITDA of $17.3–$17.7 billion and continued growth in 2026, including contributions from USA Compression Partners (USAC) and Sunoco LP (SUN).
The company also expects several major projects to scale up or enter service in 2026, including the Mustang Draw I and Mustang Draw II processing plants in the Permian Basin, the Nederland Flexport NGL expansion, NGL projects on the Lone Star Express and Gateway Pipelines, Hugh Brinson Pipeline Phase I, and natural gas pipeline projects serving data center facilities in Texas.
Moreover, the company said that it will continue to target a long-term annual distribution growth rate of 3% to 5%. Cash distributions will be supported by an expanding asset base that offers a strong product and geographic diversity. The company also benefits from its balanced earnings across its nationwide network of natural gas, NGL, and crude oil assets.
Energy Transfer LP (NYSE:ET) operates as a provider of energy-related services in the United States. The company operates through the Interstate Transportation and Storage; Investment in Sunoco LP; Intrastate Transportation and Storage; Natural Gas Liquid (NGL) and Refined Products Transportation and Services; Crude Oil Transportation and Services; Midstream; Investment in USA Compression Partners, LP (USAC); and All Other segments.
9. Scorpio Tankers Inc. (NYSE:STNG)
Forward P/E: 10.27
Potential Upside: 35%
Number of Hedge Fund Holders: 30
According to the company’s announcement dated January 5, it has entered into five-year time charter agreements for two of its LR2 product tankers, STI Rose and STI Alexis. Both tankers were constructed in 2015 at a daily rate of $29,000 per vessel. The charters are scheduled to begin in the first quarter of 2026.
The company currently owns or leases a fleet of 93 product tankers with an average age of 9.8 years. Its fleet consists of 42 MR tankers, 14 Handymax tankers, and 37 LR2 tankers. The firm has also agreed to sell three LR2 product tankers, with closings expected in the first quarter of 2026. In addition to this, the company has 4 MR newbuildings expected to be delivered in 2026 and 2027, two LR2 newbuildings due in the third quarter of 2027, and two VLCC newbuildings with planned delivery in the second half of 2028.
On January 2, BTIG analyst Gregory Lewis reaffirmed a Buy rating on the stock, along with the price target of $75. The firm’s price target implies a further 36.4% upside from the current levels. This upside is consistent with the median Wall Street analysts’ upside of 35%.
Scorpio Tankers Inc. (NYSE:STNG) is engaged in the seaborne transportation of refined petroleum and crude oil products globally. Its fleet consists of 99 owned and leased financed tankers as of March 20, 2025. The company was founded in 2009 and is based in Monaco.
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