10 Most Undervalued Energy Stocks to Buy According to Hedge Funds

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1. Exxon Mobil Corporation (NYSE:XOM)

No. of Hedge Fund Holders: 104

Forward P/E Ratio as of May 2: 13.77

Topping our list of the Most Undervalued Energy Stocks to Invest in is Exxon Mobil Corporation (NYSE:XOM), which manages an industry-leading portfolio of resources and is one of the largest integrated fuels, lubricants, and chemical companies in the world. The company operates facilities and markets products around the globe and explores for oil and natural gas on six continents.

Exxon Mobil Corporation (NYSE:XOM) had a strong Q1 2025, reporting an adjusted EPS of $1.76 against expectations of $1.74, as production growth and cost cuts offset the impact of falling oil prices. The industry behemoth’s global oil and gas production totaled 4.55 million boe/d during the quarter, up from 3.78 million boe/d in the same period last year. Moreover, the company has taken an impressive $12.7 billion of structural costs out of the business since 2019. Exxon also generated an industry-leading $13 billion in cash flow from operations in Q1, while its free cash flow came in at $8.8 billion. Notably, the company maintains a strong reputation as a cash engine, and over the last three years, its total free cash flow equaled more than 25% of its current market cap.

Exxon Mobil Corporation (NYSE:XOM) paid $4.3 billion in dividends and repurchased $4.8 billion in shares in Q1 2025, staying on track to meet its annual share repurchase goal of $20 billion. The company recently declared a Q2 dividend of $0.99 per share and boasts an annual dividend yield of 3.73%. As of the end of Q1 2025, Exxon has delivered an industry-leading 3-year total shareholder return of 60%, for a CAGR of 17%.

Overall, Exxon Mobil Corporation (NYSE:XOM) ranks first on our list of the most undervalued energy stocks to buy according to hedge funds. While we acknowledge the potential of XOM to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than XOM but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.

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