12 Best Cheap Stocks to Buy Right Now

9. Coterra Energy Inc. (NYSE:CTRA)

Upside: 17.21%

Forward P/E: 12.93x

Number of Hedge Fund Holders: 47

Coterra Energy Inc. (NYSE:CTRA) is one of the Best Cheap Stocks to Buy Right Now.

Coterra Energy and Devon Energy announced on February 2 a $58 billion all-stock merger, which would make the combined company one of the largest shale producers in the Permian Basin. Combined, these companies currently produce an equivalent of 1.6 million barrels of oil per day. As part of the deal, Coterra shareholders will receive 0.70 shares for each share held. Devon will effectively own 54% of the combined company.

On the announcement, Clay Gaspar, Devon’s President and CEO, said,

We’ve now built a diverse asset base of high-quality, long-duration inventory to drive resilient value creation and returns for shareholders through cycles. Underpinned by our leading position in the best part of the Delaware Basin and a deep set of complementary assets, we expect to capture annual pre-tax synergies of $1 billion. This will drive higher free cash flow and greater shareholder returns beyond what either company could achieve alone.

Several firms updated their target prices for Coterra Energy immediately after the deal announcement. Susquehanna raised its target price to $34 (up from $32) and maintained a “Positive” rating. The firm also noted that it expects this merger to be value accretive.

Roth Capital, meanwhile, trimmed its target price to $28 (down from $30). They noted that they do not expect other players such as ConocoPhillips, Chevron, or EOG Resources to make their own bid for Coterra Energy.

Still, on the topic of target prices, CNN’s data show that 25 of 31 analysts (~81%) covering CTRA have a “Buy” rating, with the remaining six (~19%) having a “Hold” recommendation. The median target price is $33 (with a high of $40), implying an upside of 17.21% (42.07% if using the highest estimate).

Coterra Energy Inc. (NYSE:CTRA) is an independent oil and gas company operating in the Permian Basin.