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.
9. Petróleo Brasileiro – Petrobras (NYSE:PBR)
Forward Price-to-Earnings Ratio: 5.17
Analyst Upside: 37.41%
Number of Hedge Fund Holders: 33
Petróleo Brasileiro – Petrobras (NYSE:PBR) is one of the 10 most undervalued oil stocks to buy according to analysts. Citi analysts maintained their Neutral rating for Petróleo Brasileiro – Petrobras (NYSE:PBR) with a price target of $12.50 on June 2. This move comes after Petrobras informed fuel distributors that gasoline prices would be lowered by 5.6%. In keeping with a trend of declining oil prices, the price will drop from R$3.02/L to R$2.85/L.
This marks the most recent price change since July 2024. Currently, domestic gasoline prices are 2% higher than international parity, according to the Brazilian Association of Fuel Importers (ABICOM). That said, prices are expected to fall below international parity pricing as a result of the recent drop.
Although the move could adversely impact Petrobras’s revenue and EBITDA, possibly by about $690 million a year, Citi analysts pointed out that it might also have mixed effects on the fuel distribution industry. In addition to potentially affecting working capital investments and decreasing smaller distributors’ competitiveness, the reduced gasoline price may also have a negative inventory impact on second-quarter EBITDA margins.
Petróleo Brasileiro – Petrobras (NYSE:PBR) is an energy company under Brazilian government control that is involved in the exploration, production, refining, and marketing of oil and gas. It is divided into three sections: Gas & Power, Refining & Marketing, and Exploration & Production.
8. ONEOK, Inc. (NYSE:OKE)
Forward Price-to-Earnings Ratio: 13.36
Analyst Upside: 23.83%
Number of Hedge Fund Holders: 42
ONEOK, Inc, (NYSE:OKE) is one of the 10 most undervalued oil stocks to buy according to analysts. Brandon Bingham, an analyst at Scotiabank, maintained his Outperform rating on ONEOK, Inc, (NYSE:OKE) on June 5 and reduced his price target from $96 to $93 for the company’s shares.
The analyst informed investors that the firm is extending its target valuation year to 2027 and releasing its forecasts for 2028 for equities in the U.S. Midstream sector. With few triggers on the horizon, Scotiabank still anticipates that units will stay range-bound.
Additionally, NGP XI Midstream Holdings sold the remaining 49.9% stake in the Delaware Basin joint venture (JV) to ONEOK, Inc, (NYSE:OKE) for $940 million on June 4. The agreement, which includes $530 million in cash and $410 million in OKE ordinary stock, establishes ONEOK as the only owner of the joint venture.
With its almost 60,000-mile pipeline network, ONEOK, Inc, (NYSE:OKE) is essential to the transportation of crude oil, natural gas, natural gas liquids (NGLs), and refined products, meeting both domestic and global energy demands.
7. Baker Hughes Company (NASDAQ:BKR)
Forward Price-to-Earnings Ratio: 14.31
Analyst Upside: 25.80%
Number of Hedge Fund Holders: 50
Baker Hughes Company (NASDAQ:BKR) is one of the 10 most undervalued oil stocks to buy according to analysts. Analyst firm UBS maintained its rating of Baker Hughes Company (NASDAQ:BKR) at Neutral on June 10 and set a stable price target of $40 on the company’s shares. The update followed Baker Hughes’ announcement that it was selling its PSI product line to Crane Company for $1.15 billion.
The deal, going for a price much higher than Baker Hughes’ current EV/EBITDA multiple, is viewed as a strategic move for the company. Baker Hughes views the deal as a strategic decision because it was sold for a price far greater than its current EV/EBITDA multiple. It is expected that the deal will help Baker Hughes raise its profit margins, which will help it achieve its goal of an EBITDA margin of 20%.
Crane Company, a diverse manufacturer of designed industrial goods, has purchased the PSI product line, which deals with pressure pumping systems. The sale is a component of Baker Hughes’ ongoing endeavors to optimize its operations and concentrate on more lucrative areas.
Baker Hughes Company (NASDAQ:BKR), one of the biggest oil field services, industrial, and energy technology firms in the world, offers goods and services to the oil and gas sector for exploration and production as well as other industrial and energy applications.
6. Shell plc (NYSE:SHEL)
Forward Price-to-Earnings Ratio: 10.29
Analyst Upside: 7.95%
Number of Hedge Fund Holders: 50
Shell plc (NYSE:SHEL) is one of the 10 most undervalued oil stocks to buy according to analysts. Shell plc (NYSE:SHEL) declared on June 11 that it will expand its LNG capacity by up to 12 million metric tons from ongoing projects by the end of the decade. According to analysts, Shell plc (NYSE:SHEL) is a current buyer of about 70 million metric tons of contractual LNG annually. For comparison, Shell LNG Marketing and Trading shipped around 65 million tons of LNG to over 30 nations worldwide last year.
Speaking on this, Shell’s president of integrated gas, Cederic Cremers, talked about improving the company’s ability to supply clients through contracts with third-party vendors and acquisitions, such as the Pavilion Energy purchase in Singapore, which was finalized at the end of the first quarter. He went on to say that by 2030, the United States and Qatar will account for 60% of the new production, with demand primarily coming from Asia and hard-to-electrify zones.
Shell plc (NYSE:SHEL) is a global energy and petrochemical company that explores, manufactures, and markets bitumen, lubricants, low-carbon fuels, natural gas, crude oil, and natural gas liquids.
5. BP p.l.c. (NYSE:BP)
Forward Price-to-Earnings Ratio: 10.42
Analyst Upside: 11.24%
Number of Hedge Fund Holders: 51
BP p.l.c. (NYSE:BP) is one of the 10 most undervalued oil stocks to buy according to analysts. Murray Auchincloss, the CEO of BP p.l.c. (NYSE:BP), reaffirmed his belief on June 12 that the company will accomplish its $20 billion disposal goal, with a number of acquisitions anticipated to be disclosed “relatively soon.”
As part of a larger $20 billion divestment plan by 2027, BP p.l.c. (NYSE:BP) has started selling its Castrol lubricants division with the goal of raising up to $10 billion. In response to growing investor pressure, the British energy company is making efforts to reallocate cash, lower debt, and boost shareholder returns. The transaction comes after prior rumors that Saudi Aramco had been considering about making a bid. BP acknowledged that it had inked agreements for $1.5 billion in divestitures so far and is still looking into selling other assets, including its Gelsenkirchen refinery and a stake in the solar energy company Lightsource bp.
In a virtual meeting with RBC, Auchincloss mentioned flexibility in a number of areas, including about $500 million in exploration, $1 billion in major unsanctioned projects, and potential changes in the U.S. onshore sector, where current spending is about $2.4 billion a year.
BP p.l.c. (NYSE:BP) is an integrated oil and gas firm offers carbon-related goods and services. Its operations are separated into three segments: Customers and Products, Oil Production and Operations, and Gas and Low Carbon Energy.
4. Halliburton Company (NYSE:HAL)
Forward Price-to-Earnings Ratio: 8.36
Analyst Upside: 44.73%
Number of Hedge Fund Holders: 54
Halliburton Company (NYSE:HAL) is one of the 10 most undervalued oil stocks to buy according to analysts. Halliburton Company (NYSE:HAL) and Chevron Corporation announced on June 12 that they are collaborating together to create a new method that will allow for closed-loop, feedback-driven completions in Colorado. With the help of subsurface input and automated stage execution, this intelligent fracturing technique maximizes energy delivery into the wellbore without the need for human involvement.
To facilitate this new method of intelligent completions, a mix of technology from the wellsite to the cloud is needed. With its OCTIV auto frac and Sensori monitoring, Halliburton’s ZEUS IQ intelligent fracturing platform offers the required closed feedback loop and control capacity. Meanwhile, enhanced decision-making will be made possible by an algorithm that incorporates Chevron’s subsurface understanding and hydraulic fracturing expertise.
A multi-year agreement was also reached on June 10 between Halliburton Company (NYSE:HAL) and Repsol Resources UK, a division of Repsol of Spain, to support the operator’s full well lifecycle on oil and gas assets in the UK area of the North Sea. Halliburton clarified that it will offer subsurface technologies, drilling and completion services, as well as digital solutions for new developments, while highlighting that this agreement allows it to work with Repsol to maximize the UK North Sea’s remaining potential.
Halliburton Company (NYSE:HAL) supplies products and services to the global energy sector. It operates in two segments: Completion & Production and Drilling & Evaluation.
3. Marathon Petroleum Corporation (NYSE:MPC)
Forward Price-to-Earnings Ratio: 14.06
Analyst Upside: 6.16%
Number of Hedge Fund Holders: 57
Marathon Petroleum Corporation (NYSE:MPC) is one of the 10 most undervalued oil stocks to buy according to analysts. On June 11, Wolfe Research maintained its Outperform rating on Marathon Petroleum Corporation (NYSE:MPC) while increasing its price target to $187 from $186.
In keeping with its larger refining competitors, Marathon Petroleum Corporation (NYSE:MPC) has outperformed the Energy Select Sector SPDR Fund by about 17% year-to-date. According to Wolfe Research, the second quarter is a seasonal turning point for margins, but there are still potential challenges, including tight crude differentials.
The firm emphasized that Marathon Petroleum Corporation (NYSE:MPC) has one of the lowest cost structures in the industry and that Marathon’s 64% ownership holding in MPLX reduces the volatility of refining margins. Marathon has repurchased around 45% of its outstanding shares since the start of 2022, at a rate that will retire an additional 4% at present rates by the end of this year.
Additionally, the research firm pointed out that Marathon Petroleum Corporation (NYSE:MPC) remains hopeful about the refining environment as announcements of closures in key regions commence, especially on the West Coast.
With 13 refineries and a daily crude oil capacity of almost 3 million barrels, Marathon Petroleum Corporation (NYSE:MPC) is a prominent integrated downstream energy corporation that manages the largest refining system in the United States.
2. Chevron Corporation (NYSE:CVX)
Forward Price-to-Earnings Ratio: 14.84
Analyst Upside: 9.95%
Number of Hedge Fund Holders: 81
Chevron Corporation (NYSE:CVX) is one of the 10 most undervalued oil stocks to buy according to analysts. BofA maintained its Buy rating on Chevron Corporation (NYSE:CVX) and reduced its price target from $172 to $170 back on May 23. The firm, which renewed its refiners projections and observes that they are below consensus for 2025 and 2026 EBITDA, indicates that its price targets relating to the “Majors” like Chevron are “little changed.” That said, BofA adds that it updated its targets for refiners, as they no longer include a worse case recessionary environment.
In another vein, a $53 billion merger involving Chevron Corporation (NYSE:CVX) and Hess Corporation has been postponed due to an arbitration dispute that Exxon Mobil and China’s CNOOC, Hess’ Guyana partners, filed.
In order to acquire Hess’ interest in the Guyana field, Exxon and CNOOC assert that they have a contractual right of first refusal. Meanwhile, Hess and Chevron contend that the clause isn’t applicable to the sale of the entire company. Announced in October 2023, the anticipated acquisition is one of the largest transactions in the oil industry in recent memory. It is essential to Mike Wirth, the CEO of Chevron Corporation (NYSE:CVX), and his plan to boost the oil company’s bottom line.
Chevron Corporation (NYSE:CVX), based in San Ramon, California, is a major American global energy company that specializes in the oil and gas industry. Founded as the Standard Oil Company of California, it is the second-largest direct descendant of Standard Oil.
1. Exxon Mobil Corporation (NYSE:XOM)
Forward Price-to-Earnings Ratio: 14.11
Analyst Upside: 11.99%
Number of Hedge Fund Holders: 94
Exxon Mobil Corporation (NYSE:XOM) is one of the 10 most undervalued oil stocks to buy according to analysts. On June 4, UBS analysts maintained their $130 price target and reiterated a Buy rating on Exxon Mobil Corporation (NYSE:XOM). The update followed an investor meeting with Jim Chapman, vice president of investor relations and treasurer, and Darren Woods, chairman and CEO of ExxonMobil.
The acquisition of Pioneer Natural Resources, ExxonMobil’s technological advantages, and the company’s possible effects on the Permian Basin were among the key topics of discussion during the conference. Additionally, analysts focused on the Chevron/Hess arbitration as well as current market dynamics.
Moreover, ExxonMobil’s strong asset base and growth across its various divisions were cited by UBS analysts as factors contributing to the company’s solid prospects over the next five years. Their optimistic outlook was also bolstered by advances in cost structure, low carbon investments, and financial strength.
Exxon Mobil Corporation (NYSE:XOM) engages in the production, trade, transportation, and sale of crude oil, natural gas, petroleum products, petrochemicals, and specialized goods.
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