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.
8. Antero Resources Corporation (NYSE:AR)
Forward P/E: 10.26
Potential Upside: 49.78%
Number of Hedge Fund Holders: 70
On January 5, Wells Fargo analyst Sam Margolin added the company to the firm’s Q1 2026 Tactical Ideas list. According to the firm, Antero Resources’ highly accretive HG acquisition has recently been impacted by commodity volatility. This acquisition adds $10 per share to NAV and offers strategic benefits within West Virginia’s growing data center ecosystem.
Wells Fargo also reiterated its Buy rating on the stock, along with a price target of $49 on January 5. The firm’s price target suggests 55.5% upside from the current levels, which is slightly higher than the median Wall Street analysts’ upside of 49.78%.
Reflecting similar optimism, Seibert Williams Shank and Co. also maintained its Buy rating on the stock on December 26. However, the firm had a slightly higher price target of $50 for the shares, representing an upside of 58.7%. The stock is currently trading below its lowest Wall Street price target of $36, making it a more compelling choice for investors.
Antero Resources Corporation (NYSE:AR) operates as an independent oil and natural gas company. It is involved in the production, acquisition, development, and exploration of natural gas liquids (NGLs), natural gas, and oil properties across the United States. The company operates through three segments: Marketing, Exploration & Production, and Equity Method Investment in Antero Midstream.
7. Sunoco LP (NYSE:SUN)
Forward P/E: 9.82
Potential Upside: 14.88%
Number of Hedge Fund Holders: 5
Sunoco LP (NYSE:SUN) released its 2026 guidance on January 6, 2026, forecasting a full-year adjusted EBITDA of $3.1 billion to $3.3 billion. The outlook reflects roughly $125 million in expected synergies from the Parkland acquisition. It also incorporates a planned 50-day maintenance turnaround at the Burnaby Refinery, beginning in late January, as well as the expected first-quarter closing of the TanQuid acquisition. The guidance also assumes at least $600 million in growth capital expenditures, along with $400 million to $450 million in maintenance capital expenditures.
Moreover, the company outlined its capital allocation strategy. This includes a multi-year pipeline of bolt-on acquisitions of no less than $500 million per year and a return to its long-term leverage target of four times during the year. The strategy also targets a distribution growth rate of at least 5% supported by quarterly increases. The company also expects to increase distributable cash flow per common unit for the ninth consecutive year and provide equal dividend equivalents to its investors. These actions highlight the partnership’s growing focus on income growth for unitholders and balance sheet strength.
The company also received an upgrade from Raymond James on January 5. Justin Jenkins, an analyst at Raymond James, upgraded the stock from Outperform to Strong Buy while maintaining the price target of $70. The upgrade is part of a broader rating adjustment in the midstream supplier sector for 2026.
Sunoco LP (NYSE:SUN) is involved in the distribution of motor fuels and energy infrastructure in the United States. The company operates through the Pipeline Systems, Fuel Distribution, and Terminals segments. It was incorporated in 1886 and is headquartered in Dallas, Texas.
6. Devon Energy Corporation (NYSE:DVN)
Forward P/E: 9.82
Potential Upside: 23.04%
Number of Hedge Fund Holders: 59
On January 7, Betty Jiang of Barclays maintained her Hold rating on the stock and continued to see a $40 price target for the shares. Her price target implies an additional 12% upside from the current levels. Prior to that, Bernstein presented a similar stance. The research firm maintained its Buy rating on the stock on January 7 while lowering its price target from $48 to $42. This price target revision came from the analyst Bob Brackett. According to his updated outlook, the oil market is expected to face short-term price pressure, due to which the price target was adjusted downward. However, the firm is optimistic about the oil sector’s long-term strength.
On December 31, Roth Capital also issued an important update about Devon Energy. Roth Capital analyst Nicholas Pope forecasts the company’s 2026 production to slightly exceed its production outlook. However, the firm anticipates that the Bakken will post the largest declines among DVN’s four main producing assets during 2026. The analyst commented in a research note to investors that the company’s valuation remains compelling, backed by its strong free cash flow generation.
Devon Energy Corporation (NYSE:DVN) operates as an independent energy company. The company is involved in the development, exploration, and production of natural gas, natural gas liquids, and oil across the United States. It was incorporated in 1971 and is based in Oklahoma City, Oklahoma.
5. Range Resources Corporation (NYSE:RRC)
Forward P/E: 8.96
Potential Upside: 25.71%
Number of Hedge Fund Holders: 48
On January 7, financial services firm Barclays maintained its Hold rating on the Range Resources Corporation (NYSE:RRC) stock. Analyst Betty Jiang also reaffirmed the price target of $44. Her price target represents a further 31.3% upside from the current levels, which is slightly higher than the median Wall Street analysts’ upside of 25.71%. Additionally, Roth MKM also reiterated its Hold rating along with the price target of $36 for the stock. The firm’s price target is the lowest on Wall Street, as per CNN’s compilation of 30 different ratings.
On December 31, 2025, the company announced that it plans to redeem the entire $600 million outstanding balance of its 8.25% senior notes due 2029. The redemption is scheduled for January 15, 2026, in accordance with the governing indenture, at which point no notes will remain outstanding. Holders will receive 101.375% of the principal amount, along with the unpaid and accrued interest. The company intends to finance the redemption through its existing revolving credit facility, allowing the company to retire higher-cost debt and reshape its capital structure going forward.
Range Resources Corporation (NYSE:RRC) is an independent natural gas liquids (NGLs), natural gas, and oil company operating in the United States. It is involved in the development, acquisition, and exploration of natural gas and oil properties located in the Appalachian region.
4. SM Energy Company (NYSE:SM)
Forward P/E: 7.91
Potential Upside: 89.63%
Number of Hedge Fund Holders: 44
On January 5, Tim Rezvan of KeyBanc maintained his Buy rating on SM Energy Company (NYSE:SM) stock, along with a target price of $28. The rating suggests another 55% upside from current levels. Mizuho also changed its outlook on January 9, lowering the price target to $34 from $38, but remained bullish despite the downward revision.
Analysts continue to reconsider their opinions on the stock in the backdrop of the SM Energy and Civitas Resources (NYSE:CIVI) merger. The merger is an all-stock transaction, valued at $12.8 billion, and was first announced in November 2025. Analysts like those at KeyBanc were initially sceptical of the deal; however, they did not shy away from maintaining a bullish stance on the stock
Even though Wall Street maintains price targets as high as $60 for SM Energy, it is quite likely that the upside will stay limited until the merger goes through. Post-merger, rapid deleveraging and improved free cash flow generation will support the bullish thesis for the stock, according to KeyBanc.
SM Energy Company (NYSE:SM) is an oil and gas exploration company with headquarters in Denver, Colorado. It mainly focuses on activities within the US and is known for operating in high-quality resource areas.
3. Civitas Resources, Inc. (NYSE:CIVI)
Forward P/E: 6.06
Potential Upside: 38.51%
Number of Hedge Fund Holders: 31
Siebert Williams Shank & Co reaffirmed its Hold rating on the stock on December 26. Gabriele Sorbara, an analyst at Siebert Williams Shank & Co., also maintained the price target of $29 for the shares. Based on the current levels, the target price indicates 12.5% further upside. The stock is currently trading slightly below the lowest Wall Street price target of $27.
The company satisfied a major regulatory requirement to close its pending merger with SM Energy Company on December 18. It received an early termination of the Hart-Scott-Rodino Antitrust Improvements Act waiting period. This approval reduces antitrust uncertainty surrounding the transaction and represents a key milestone towards the deal’s completion. Additionally, this clearance also supports Civitas Resources’ plans to strengthen its competitive standing and operational footprint across the U.S. oil and gas sector.
It is worth noting that since the merger was first announced on November 2, analysts pointed out the limited upside in the stock, as the valuation is expected to be mainly tied to the merger deal until completion.
Civitas Resources, Inc. (NYSE:CIVI) operates as a production and exploration company. The company focuses on the production, development, and acquisition of crude oil and associated liquids-rich natural gas. Civitas Resources was founded in 2010 and is headquartered in Denver, Colorado.
2. Cosan S.A. (NYSE:CSAN)
Forward P/E: 5.9
Potential Upside: 22.96%
Number of Hedge Fund Holders: 9
Cosan S.A. (NYSE:CSAN) has announced a number of capital restructuring actions to improve control over its assets as well as add liquidity. On December 30, 2025, the company announced that Banco Bradesco BBI and Banco BTG Pactual purchased preferred shares in Cosan Dez Participações S.A. for a combined value of $4 billion. Both companies acquired an equal stake. This transaction represents roughly 23% of the firm’s equity and grants control rights equivalent to 9.98% of its voting capital.
This deal renegotiates and restructures a financing agreement originally established in 2022 with Bradesco BBI. It also incorporates a staggered put option for the banks beginning in the 5th year. Through this transaction, Cosan Dez aims to advance its post-capitalization liability optimization strategy and reduce the financial cost of its previous structure, and maintain control over Compass Gás e Energia.
Cosan S.A. also announced on December 22, 2025, that it had sold its common shares representing approximately 4.96% of the total share capital of its logistics subsidiary Rumo S.A. At the same time, the company has entered into total return swap derivative instruments to retain the same economic exposure to the divested shares. According to the company, this move is a part of its broader strategy to improve liquidity and cash management without reducing its economic or control rights in Rumo.
Cosan S.A. (NYSE:CSAN) is engaged in the fuel distribution business. The company operates through five segments: Radar, Moove, Raízen, Rumo, and Compass. It was incorporated in 1936 and is based in São Paulo, Brazil.
1. Crescent Energy Company (NYSE:CRGY)
Forward P/E: 5.14
Potential Upside: 71.78%
Number of Hedge Fund Holders: 38
Around January 9, Phillip Jungwirth, an analyst at BMO Capital Markets, initiated coverage of Crescent Energy Company (NYSE:CRGY) with a Market Perform rating and set a $10 price target. The analyst was encouraged by the improved margins and cost structure resulting from the streamlining of the company’s asset base. However, the analyst remains cautious about the 2026 outlook, which is expected to face headwinds, including a reduction in legacy Vital production to a sustainable baseline. Moreover, potential volatility in oil prices might affect de-leveraging plans.
Earlier, the company, through its wholly-owned subsidiary Crescent Energy Finance LLC, issued two series of senior unsecured notes comprising $294.8 million due July 31, 2029, with a 7.75% coupon, and $237.2 million due October 15, 2030, with a 9.75% coupon. Both issuances are unconditionally and fully guaranteed on a senior unsecured basis by existing subsidiary guarantors under the group’s revolving credit facility. However, neither the listed parent company nor the OpCo provides the guarantee.
The Crescent 2029 and 2030 notes were issued in unregistered exchange offers for the existing Vital notes and contain standard high‑yield features, including change‑of‑control repurchase rights, optional redemption schedules, acceleration upon events of default, and leverage‑ and payout‑restricting covenants. At the same time, supplemental indentures for the vital notes became effective as of December 12, 2025, eliminating certain restrictive covenants. These combined actions reshaped the company’s overall capital structure and covenant package for noteholders.
Crescent Energy Company (NYSE:CRGY) operates as an energy company. The company is engaged in the production and exploration of natural gas, crude oil, and natural gas liquids across the United States. It operates mainly in Texas and the Rocky Mountain region.
While we acknowledge the potential of CRGY as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than CRGY and that has 100x upside potential, check out our report about this cheapest AI stock.
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