In this article, we are going to discuss the 10 most undervalued energy stocks to buy according to hedge funds.
As of the close of May 2, 2025, the overall energy sector is undervalued by 13.1%, as compared to the general market’s undervaluation of 5.3%. The current downturn in the energy sector is primarily attributed to the current trade war sparked by President Trump’s tariffs and its resultant forecasted global economic slowdown. Moreover, global crude oil prices have plunged heavily since last month, with the West Texas Intermediate (WTI) crude price currently hovering around the $56 mark – a level it last hit during the Covid-19 pandemic in 2021.
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Crude oil took a fresh hit this weekend after OPEC+ stunned the market by announcing a larger-than-expected output increase for June. This follows a similar surge announced for May and signals a sharp reversal from the group’s efforts to defend crude prices. It seems like Saudi Arabia has adopted a low-price strategy, aiming to discipline overproducing members like Kazakhstan and Iraq. This could also be a part of Riyadh’s efforts to build good relations with Donald Trump, who has recently been calling on the Kingdom to increase production in order to bring prices down. Given the high volatility in the market, it comes as no surprise that short-sellers marginally increased their bets against oil and gas stocks in March, with short interest in the energy sector reaching 2.58% compared to 2.52% in February.
That said, while oil may be presenting a bleak outlook, there are other sectors within the energy business that look very promising right now. A significant growth driver for the global energy industry is the ongoing AI boom and its accompanying power-hungry data centers. According to the International Energy Agency, the global electricity demand from data centers is set to more than double by 2030 to around 945 terawatt-hours (TWh), slightly more than the entire electricity consumption of Japan today. The rise of AI is also reshaping US power markets, as according to BNEF, the country’s data center demand is projected to rise from 3.5% of total electricity demand today to 8.6% by 2035.
Big Tech seems to have jumped headfirst into the AI boom, with commitments to invest hundreds of billions of dollars to build data centers and ensure their energy supply. In fact, this strategic move has injected new life into sectors such as nuclear, which has regained the spotlight after several tech giants met on the sidelines of the CERAWeek conference in March and signed a pledge to support the goal of at least tripling the world’s nuclear energy capacity by 2050.
That said, there have been concerns lately that the power demand required by the ballooning data center industry may have been overestimated, which led to several energy stocks posting significant declines not so long ago. However, the recently reported better-than-expected results from the cloud and AI businesses of some American tech giants suggest that these fears may have been overblown. Commercial real estate executives have stated that while there has been a ‘pause’ in some data center capex, it is likely to be temporary, with hundreds of billions of dollars still to be spent.
With that said, here are the Most Undervalued Energy Stocks to Buy 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 15 as of the close of May 2, 2025. Then, we identified companies that have delivered substantial returns over the last five years, in order to steer clear of potential value traps. In the end, we selected companies with the highest number of hedge fund holders in the Insider Monkey database, as of Q4 2024. The following are the Most Undervalued Energy Stocks According to Hedge Funds.
At Insider Monkey, we are obsessed with the stocks that hedge funds pile into. 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 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10. Permian Resources Corporation (NYSE:PR)
No. of Hedge Fund Holders: 54
Forward P/E Ratio as of May 2: 9.45
Permian Resources Corporation (NYSE:PR) is an independent oil and natural gas company with operations focused in the Permian Basin, with assets concentrated in the core of the Delaware Basin.
Permian Resources Corporation (NYSE:PR) had a strong Q4 2024 with a revenue of $1.3 billion in Q4 2024, up 15.44% YoY and in line with market expectations. The company also posted an adjusted EPS of $0.36, against expectations of $0.34. PR also generated $3.4 billion in cash from operations in FY 2024, while its adjusted free cash flow came in at $1.4 billion. As a result, the firm ended the year with total liquidity of $3 billion, up $1 billion from 2023. PR also remains committed to its shareholders and increased its quarterly base dividend from $0.05 to $0.15 per share in February.
Permian Resources Corporation (NYSE:PR) was able to significantly bolster its portfolio with approximately $1.2 billion of acquisitions in 2024, adding 50,000 net acres and about 20,000 boe/d across its acreage position. As a result, the company’s oil production in FY 2024 shot up by almost 64% YoY, while its overall output surged by a hefty 77.1%. PR intends to pump these numbers up even further, announcing 8% higher annual production in FY 2025 as compared to last year.
9. Shell plc (NYSE:SHEL)
No. of Hedge Fund Holders: 54
Forward P/E Ratio as of May 2: 8.35
Shell plc (NYSE:SHEL) is a global group of energy and petrochemical companies, employing 103,000 people and having operations in more than 70 countries. The company is also the number one global lubricant supplier, as well as the top player in the rapidly expanding LNG sector.
Shell plc (NYSE:SHEL) showed a mixed performance in Q1 2025, reporting a revenue of $69.23 billion and missed expectations by almost $9.9 billion. However, the company’s adjusted EPS of $1.84 managed to top estimates by $0.23. That said, the falling oil prices and declining refining margins have taken their toll, reducing Shell’s Q1 net profit by 28% YoY to $5.58 billion. The oil and gas giant maintains a robust balance sheet and generated $11.9 billion of cash flow from operations during the quarter, while reporting a free cash flow of $5.32 billion.
Shell plc (NYSE:SHEL) announced in March that it would lower its spending to $20-$22 billion per year through 2028, while increasing shareholder distributions to 40%-50% of cash flow from operations, up from a 30%-40% range previously. The company reaffirmed this commitment last week with the announcement of another $3.5 billion share buyback program, which it expects to complete over the next three months. This marks Shell’s 14th consecutive quarter of a buyback program of at least $3 billion, highlighting its dedication to its shareholders.
8. Devon Energy Corporation (NYSE:DVN)
No. of Hedge Fund Holders: 55
Forward P/E Ratio as of May 2: 7.93
Devon Energy Corporation (NYSE:DVN) is a leading independent energy company engaged in finding and producing oil and natural gas, with operations focused onshore in the United States.
Devon Energy Corporation (NYSE:DVN) had a strong Q4 2024 as its adjusted EPS of $1.16 topped expectations of $1. The company’s revenue also increased by 6.22% YoY to $4.4 billion, beating estimates by around $155.3 million. Devon’s oil production reached an all-time high of 398,000 bpd during the quarter, while its overall production came in at 848,000 boe/d. Such a strong performance was aided by the contribution from the Williston Basin business, which Devon acquired from Grayson Mill Energy in a $5 billion deal last year.
Devon Energy Corporation (NYSE:DVN) has invested heavily to grow its scale across several key U.S. oil and gas production basins to reduce costs and enhance its ability to produce free cash flow. As a result, the company reported $3 billion in free cash flow last year, with the goal to generate an additional $1 billion by the end of 2026. The oil and gas producer aims to achieve this by reducing drilling and completion costs and improving operating margins. DVN also returned $2 billion to its shareholders in 2024 and is now targeting up to a 70% cash return payout at current strip pricing.
7. EOG Resources, Inc. (NYSE:EOG)
No. of Hedge Fund Holders: 62
Forward P/E Ratio as of May 2: 11.7
Next on our list of the Best Undervalued Energy Stocks is EOG Resources, Inc. (NYSE:EOG), one of the largest crude oil and natural gas exploration and production companies in the United States with proved reserves in the US and Trinidad.
EOG Resources, Inc. (NYSE:EOG) beat profit estimates in Q1 2025, benefiting from higher natural gas prices and production. The company’s adjusted EPS of $2.87 topped expectations by $0.1. However, its revenue fell by 7.41% YoY to $5.67 billion and fell short of estimates by $182 million. EOG earned $1.6 billion in adjusted net income and generated $1.3 billion in free cash flow during the quarter. Staying true to its strong commitment to shareholders, the company returned these $1.3 billion in the form of dividends and share repurchases. The energy firm declared a quarterly cash dividend of $0.975 per share this month and currently boasts an annual dividend yield of 3.52%.
The total quarterly production of EOG Resources, Inc. (NYSE:EOG) rose 4.8% to 98.1 million barrels of oil equivalent (MMBoe) in Q1. The company has revealed that it is planning to reduce its capital expenditure plan for the year by $200 million due to tariff uncertainty, while still delivering approximately 2% YoY oil growth and a 5% YoY surge in overall production.
6. First Solar, Inc. (NASDAQ:FSLR)
No. of Hedge Fund Holders: 65
Forward P/E Ratio as of May 2: 7.63
First Solar, Inc. (NASDAQ:FSLR) is a leading American solar technology company and global provider of responsibly produced, eco-efficient solar modules. FSLR is unique among the ten largest solar manufacturers in the world for being the only US-based company and not manufacturing in China.
First Solar, Inc. (NASDAQ:FSLR) had a tough Q1 2025 as its EPS of $1.95 fell below estimates by a hefty $0.6. The company’s revenue of $844.57 million was in-line with expectations but fell sharply from $1.5 billion in the previous quarter, primarily due to ‘an anticipated seasonal reduction in the volume of modules sold.’ FSLR ended the quarter with a net cash balance of $0.4 billion, down from $1.2 billion at year-end, citing capital expenditures for its Louisiana manufacturing facility and increased inventories as reasons for the decrease.
The stock of First Solar, Inc. (NASDAQ:FSLR) took a major hit last week after its CEO, Mark Widmar, stated that the scale and depth of President Donald Trump’s tariffs were unexpected and posed a ‘significant economic headwind’ to the company’s manufacturing facilities. As a result, the company has now cut its FY 2025 forecast from expected earnings of $17 – $20 per share to $12.50 – $17.50 per share, while its estimated revenue has been downgraded from $5.3 – $5.8 billion to $4.5 – $5.5 billion. The stock has also now been downgraded by several analysts, since Wall Street previously viewed First Solar as the best-positioned company in the solar industry to weather tariffs because it has invested in manufacturing facilities in the US.
5. Antero Resources Corporation (NYSE:AR)
No. of Hedge Fund Holders: 66
Forward P/E Ratio as of May 2: 11.12
Next on our list of the Most Undervalued Energy Stocks is Antero Resources Corporation (NYSE:AR), an independent natural gas and liquids company operating in the Appalachian Basin. The company is the most integrated natural gas and NGL business in the US and one of the largest suppliers to the country’s LNG market.
Despite reporting strong growth in Q1 2025, Antero Resources Corporation (NYSE:AR) fell short of estimates as its adjusted EPS of $0.78 missed consensus by $0.1. The company’s revenue of $1.35 billion also slightly fell below expectations by $44.54 million, despite shooting up by over 20.5% YoY. The strong growth was driven by a surge in the sales of natural gas and NGLs. AR also reported a substantial increase in net income, which climbed to $208 million, compared to $22.73 million in the previous year, reflecting improved operational efficiencies and cost management.
Antero Resources Corporation (NYSE:AR) remains financially strong, generating free cash flow of $337 million during the quarter, significantly up from the $15.54 million it reported in the year-ago period. The company also reduced its debt by over $200 million in Q1 and repurchased $92 million of stock. Antero still has approximately $1 billion of capacity remaining on its current share repurchase program.
With 14 billionaire holders in the IM database at the end of Q4 2024, Antero Resources Corporation (NYSE:AR) is ranked among Billionaire’s 15 Favorite Oil and Gas Stocks Right Now.
4. Schlumberger Limited (NYSE:SLB)
No. of Hedge Fund Holders: 80
Forward P/E Ratio as of May 2: 10.42
Schlumberger Limited (NYSE:SLB) is the world’s leading provider of technology for reservoir characterization, drilling, production, and processing to the global energy industry. The company’s clients include major oil and gas producers worldwide.
Schlumberger Limited (NYSE:SLB) slightly fell short of Wall Street consensus in Q1 2025, as its revenue of $8.49 billion missed estimates by $102.5 million. Latin America revenue fell 10% to $1.50 billion, with total international revenue declining 5% to $6.73 billion. However, North America posted an 8% YoY revenue increase, partly supported by strong growth in data center infrastructure. The company’s adjusted EPS of $0.72 also fell slightly below expectations by $0.01, primarily due to a significant reduction in drilling activity in Mexico. Given the recent volatility in the oil and gas industry, SLB has also made progress in expanding beyond fossil fuels, and its combined revenue from CCS, geothermal, critical minerals, and data center solutions is on pace to visibly exceed $1 billion in 2025.
Schlumberger Limited (NYSE:SLB)’s cash flow from operations more than doubled to $660 million in Q1 2025, while its free cash flow came in at $103 million. The company has committed to returning more than 50% of its free cash flow to shareholders and expects to return a minimum of $4 billion to shareholders through dividends and share repurchases this year.
Ariel Investments stated the following regarding Schlumberger Limited (NYSE:SLB) in its Q1 2025 investor letter:
“Additionally, we purchased Schlumberger Limited (NYSE:SLB), the largest oilfield services company in the world by revenue. SLB provides equipment, services and digital tools to help oil and gas producers operate more efficiently, including reservoir characterization, rig and well construction and production enhancement. We believe the company’s scale and technical expertise are key differentiators. Weak near-term demand, an oil glut, falling commodity prices and concerns about future spending amid a global shift to renewable energies presented an attractive entry point. We believe there are tailwinds supporting rising demand over the medium-term, as national oil companies invest in long-cycle projects to grow capacity and address the natural decline of production. Additionally, we expect SLB will continue to evolve their capabilities to help clients with rising energy needs going forward.”
3. Chevron Corporation (NYSE:CVX)
No. of Hedge Fund Holders: 81
Forward P/E Ratio as of May 2: 14.95
Chevron Corporation (NYSE:CVX) manufactures and sells a range of high-quality refined products, including gasoline, diesel, marine and aviation fuels, premium base oil, finished lubricants, and fuel oil additives. The oil and gas giant owns five US fuel refineries and boasts a network of Chevron and Texaco service stations.
The declining global oil prices took their toll on Chevron Corporation (NYSE:CVX)’s financial performance in Q1 2025, as the company reported adjusted earnings of $3.8 billion, or $2.18 per share. While that was down from the year-ago period of $2.93 per share, it still exceeded Wall Street expectations by $0.03. However, the company’s revenue of $47.61 billion fell below estimates by almost $783.4 million. The oil major’s global production totaled 3.35 million boe/d, flat from the same period last year, while its earnings from oil and gas declined by over 28% YoY.
Chevron Corporation (NYSE:CVX) generated $7.6 billion of cash flow from operations and $3.7 billion of free cash flow in Q1. The company used its massive cash reserves to return $6.9 billion to shareholders during the period. However, given the shaky economic outlook faced by Big Oil, Chevron has slowed the pace of its share repurchase program. The company’s share repurchases this year could be between $11.5 billion and $13 billion in FY 2025, which would be at the lower end of its guidance of $10 billion to $20 billion.
With a current annual dividend yield of 4.94%, Chevron Corporation (NYSE:CVX) is included among the 10 Energy Stocks with Fat Dividends.
2. ConocoPhillips (NYSE:COP)
No. of Hedge Fund Holders: 86
Forward P/E Ratio as of May 2: 11.03
ConocoPhillips (NYSE:COP) is one of the world’s largest independent E&P companies based on oil and natural gas production and proved reserves.
ConocoPhillips (NYSE:COP) has recently transformed itself into a low-cost oil producer by selling its higher-cost oil assets and recycling that capital into acquiring lower-cost resources. The company significantly bolstered its position with the $22.5 billion acquisition of Marathon Oil last year, which added over 2 billion barrels of oil and gas resources with an average cost of supply below $30 to its portfolio. As a result, the company reported a strong performance in Q4 2024, posting an adjusted EPS of $1.98 against estimates of $1.83. COP’s production also rose 14.8% YoY to 2.183 million boe/d in Q4 2024.
ConocoPhillips (NYSE:COP) maintains a strong balance sheet, generating $20.3 billion in operational cash flow in FY2024. Renowned for its commitment to shareholders, the company returned $9.1 billion in the form of buybacks and dividends last year, representing 45% of CFO and well above its 30% commitment. COP boasts an impressive streak of 10 consecutive years of dividend growth and has plans to return $10 billion to its shareholders this year.
In a setback for ConocoPhillips (NYSE:COP), the stock was downgraded last week from ‘Buy’ to ‘Neutral’ by Bank of America’s Kalei Akamine, who lowered its price target from $138 to $107 per share. The new take was part of a broader update on oil and gas stocks.
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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