In this article, we will take a look at the 10 Most Undervalued Oil Stocks To Buy According To Analysts.
Over the last 20 years, the United States has become the world’s largest producer of gas and oil on account of shale, which has disrupted global commodities markets and provided the domestic industry with a consistent supply of cheap energy. However, given that US oil production is predicted to decline next year for the first time since the Covid-19 outbreak, the market doesn’t appear to be as optimistic as it once was.
As falling oil prices rattle the industry, the Energy Information Administration, a branch of the Energy Department, announced on June 10 that US oil production would decline from a record high of 13.5 million barrels per day to roughly 13.3 million barrels by the end of 2026. Moreover, the EIA added that growing global stockpiles will cause Brent crude to average $61 per barrel by the end of this year and $59 per barrel in 2026.
In line with shale executives’ forecasts, the latest government estimate highlights the strains on the industry as increased production from OPEC+ and concerns about how President Trump’s trade disputes will ripple through the world economy. Executives claim that Trump’s import taxes on aluminum and steel have also increased the price of steel and other essential oil industry inputs, reducing drillers’ profit margins.
With that in mind, we will now take a look at the 10 most undervalued oil stocks to buy according to analysts.
Our Methodology
To come up with our list of the 10 most undervalued oil stocks to buy according to analysts, we went through a variety of online publications, ETFs, and stock screeners to note down equities with forward price-to-earning ratios less than 15. We then looked at the analyst upside of each company and highlighted the ones with the highest upside potential. These stocks were ranked according to the hedge fund sentiment surrounding them.
Why are we interested in 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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
10. TotalEnergies SE (NYSE:TTE)
Forward Price-to-Earnings Ratio: 8.44
Analyst Upside: 9.26%
Number of Hedge Fund Holders: 25
TotalEnergies SE (NYSE:TTE) is one of the 10 most undervalued oil stocks to buy according to analysts. On June 4, TotalEnergies SE (NYSE:TTE) declared that it had signed a deal with Shell Brasil Petróleo Ltda to swap its 20% non-operated stake in the Gato do Mato project for a 3% stake in the offshore oil field Lapa.
Located in the Santos Basin, some 270 kilometers off the coast of Brazil, the Lapa field is managed by TotalEnergies SE (NYSE:TTE) as a deep-offshore project. Having received approval back in 2023, the Lapa South-West tie-back development is expected to greatly increase the field’s production potential. When the field comes online by the end of this year, this development project is anticipated to increase production by 25,000 barrels per day, bringing Lapa’s total production to 60,000 barrels per day.
The deal is in line with TotalEnergies’ strategic focus on low-cost, low-emission projects, according to Javier Rielo, senior vice president Americas, exploration & production. He cited TotalEnergies’ recent approval of the 2024 Atapu 2 and Sepia 2 projects in Brazil as illustrations of this strategic approach.
A global integrated energy company, TotalEnergies SE (NYSE:TTE) generates electricity, renewable energy, oil, biofuels, and natural gas and green gases.
Hedge Fund Resource Center