5 Most Undervalued NASDAQ Stocks To Buy According To Hedge Funds

3. Diamondback Energy, Inc. (NASDAQ:FANG)

Number of Hedge Fund Holders: 55

P/E Ratio as of January 24: 6.06

Diamondback Energy, Inc. (NASDAQ:FANG) was founded in 2007 and is headquartered in Midland, Texas. It is an independent E&P firm that specializes in acquiring, developing, exploring and extracting unconventional and onshore oil and natural gas reserves in the Permian Basin in West Texas. Diamondback Energy, Inc. (NASDAQ:FANG) is one of the most undervalued NASDAQ stocks to monitor. 

On January 23, Barclays analyst Jeanine Wai maintained an Overweight rating on Diamondback Energy, Inc. (NASDAQ:FANG) but lowered the price target on the shares from $173 to $166. The analyst expects a weaker Q4 performance for the integrated oil and exploration and production sector compared to Q3. However, she noted that the main factors for the sector’s investment thesis are capital discipline and cash returns, which support a positive outlook.

According to Insider Monkey’s third quarter database, 55 hedge funds were long Diamondback Energy, Inc. (NASDAQ:FANG), compared to 54 funds in the preceding quarter. Donald Yacktman’s Yacktman Asset Management is the largest stakeholder of the company, with 1.26 million shares worth $152 million. 

In its Q1 2021 investor letter, Miller Value Partners, an asset management firm, highlighted a few stocks and Diamondback Energy, Inc. (NASDAQ:FANG) was one of them. Here is what the fund said:

“Diamondback Energy (FANG) returned 14.4% in the quarter as the oil price rose and fell during the quarter ending the period largely in the same place that it started. The company reported strong 3Q results beating on the top and bottom lines. The company reported revenue of $1.9B beating the consensus of $1.5B with EPS of $2.94 beating expectations for $2.79. The beat was driven by a combination of higher volumes, higher realizations, and efficiency gains. The company increased its total production guidance for the year to 370-372 mboe/d1 (up from 363-370 mboe/d) while lowering Capital Expenditure (CAPEX) guidance for the second time this year to $1.49-1.53B. The company raised the dividend for the third time this year to $2/share annually while authorizing a new $2B share repurchase program. Starting in 4Q21, the company plans to return 50% of Free Cash Flow to shareholders through the base dividend and a combination of buybacks and special dividends. Finally, the CEO Travis Stice announced plans to reduce methane emissions by 70% as part of the firm’s ESG initiative.”