In this article, we are going to discuss the 12 most undervalued natural gas stocks to buy now.
The ongoing supply disruptions in the Middle East have choked around a fifth of the global LNG supply. Moreover, an Iranian missile attack on QatarEnergy forced it to halt LNG production last month, with the company warning that the outage could remove over 12 million mtpa of supply for up to five years.
The supply disruptions have sent the spot LNG prices soaring, especially in Asia, where buyers are now looking for alternatives. The American LNG operators are now pulling all levers to ramp up supply as quickly as possible and take advantage of this opportunity.
As a result, the US Energy Information Administration (EIA) revealed in its latest Short-Term Energy Outlook that it projects the country’s natural gas exports to grow by 18% to 18.7 billion cubic feet per day (Bcf/d) in 2026, followed by an additional 10% surge to 20.5 Bcf/d in 2027. The agency expects the US LNG export terminals to operate at higher utilization rates this year, driven by increased demand for cargoes from regions outside the Strait of Hormuz.
With that said, here are the Most Undervalued Natural Gas Stocks to Invest in.
Our Methodology
To collect data for this article, we scanned the list of natural gas companies and identified stocks with a forward P/E ratio of less than 15, as of April 15. We then limited our final selection to companies that have recently reported noteworthy developments likely to impact investor sentiment. The following are the Most Undervalued Natural Gas Stocks to Buy Now.
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 498.7% since May 2014, beating its benchmark by 303 percentage points (see more details here).
12. BP p.l.c. (NYSE:BP)
Forward P/E Ratio as of April 15: 14.99
BP p.l.c. (NYSE:BP) is a British multinational company recognized worldwide for quality gasoline, transport fuels, chemicals, and alternative sources of energy such as wind and biofuels.
On April 15, UBS analyst Joshua Stone upgraded BP p.l.c. (NYSE:BP) from ‘Neutral’ to ‘Buy’, while also boosting its price target from £650 to £700. The raised target indicates an upside of over 20% from the current levels.
According to Mr. Stone, BP’s new CEO, Meg O’Neill, “takes over at a critical turning point for the company.” The analyst outlined that the current high-priced environment amid the Middle East conflict is “undoubtedly positive” for the energy giant and there are “plenty of catalysts in 2026”. However, the London-based company still has work to do to regain investor confidence and reverse the decline it has witnessed compared to its peers since 2018.
Joshua Stone highlighted right-sizing the company’s cost base as a key area for BP p.l.c. (NYSE:BP) to focus on, since the company has the highest cost intensity of its peers, with total operating expenses up around $10 billion since 2019. The analyst has suggested potential savings of $3 billion to $6 billion from the current levels.
It needs mentioning that BP p.l.c. (NYSE:BP) is already looking to optimize its operations, with a pledge to slash up to $5 billion in costs and divest $20 billion in assets by 2027.
11. Exxon Mobil Corporation (NYSE:XOM)
Forward P/E Ratio as of April 15: 14.64
Exxon Mobil Corporation (NYSE:XOM) is one of the largest integrated fuels, lubricants, and chemical companies in the world.
On April 10, TD Cowen lowered its price target on Exxon Mobil Corporation (NYSE:XOM) from $175 to $172, but maintained its ‘Buy’ rating on the shares. The trimmed target still indicates an upside of over 20% from the current price level.
The move comes after TD Cowen revised its estimates, noting that the upstream realizations and downstream margins both fell below forecasts. Moreover, Exxon’s guidance implies that all its production in the Middle East has been impacted by the war.
Exxon Mobil Corporation (NYSE:XOM) revealed on April 8 that it expects the Middle East conflict to reduce its Q1 production by 6% compared to the previous quarter, when it reported 5 million boe/day of output. The company’s upstream assets in Qatar and the United Arab Emirates, which accounted for approximately 20% of its total global oil production last year, have been impacted by the disruptions amid the war.
Hedge Fund Resource Center