We recently published a list of the 11 Best Undervalued Energy Stocks to Invest in Now. In this article, we are going to take a look at where Devon Energy Corporation (NYSE:DVN) stands against other undervalued energy stocks.
On March 18, Tortoise Capital senior portfolio manager Rob Thummel appeared on CNBC’s ‘Squawk on the Street’ to discuss his outlook on the energy sector. He believes that natural gas is positioned to lead growth in the future within the energy sector. This natural gas demand is driven by electricity and energy exports. Thummel noted that the energy and tech sectors are converging due to advancements like AI and data centers. Electricity demand fuels natural gas consumption, while US energy exports help meet global needs for low-cost and low-carbon energy. He also highlighted that the US is now emerging as the largest exporter of LNG, even though it was an LNG importer just years ago. He anticipates that the US LNG exports will soon 2x in volume over time. Thummel also expects Europe and other countries to prioritize energy security and diversify their supply sources. This will ensure reliance on US energy exports.
Thummel emphasized a focus on energy infrastructure companies while discussing his specific investment strategies as they tend to be stable and have high dividend yields even in uncertain market conditions. He thinks that the certainty provided by energy infrastructure investments in an otherwise volatile market should not be neglected. Such companies generate substantial annual cash flows while maintaining disciplined financial practices.
Thummel thinks that the energy sector trades at a discount to historical valuations despite its fundamentals. This offers the potential for high returns.
Our Methodology
We used the Finviz stock screener to compile a list of the top energy stocks that had a forward P/E ratio under 15 as of April 10. We then selected the 11 stocks that were the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q4 2024. The hedge fund data was sourced from Insider Monkey’s database which tracks the moves of over 1000 elite money managers.
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).
A group of technicians in hazmat suits inspecting a natural gas storage tank.
Devon Energy Corporation (NYSE:DVN)
Forward P/E Ratio as of April 10: 6.85
Number of Hedge Fund Holders: 55
Devon Energy Corporation (NYSE:DVN) explores, develops, and produces oil, natural gas, and natural gas liquids. It operates in the Delaware Basin located in southeast New Mexico and west Texas, Eagle Ford located in North America, Anadarko Basin located in western Oklahoma, Williston Basin located in North Dakota, and Powder River Basin located in Wyoming.
The company is enhancing its Eagle Ford position to maximize returns and drive growth. It recently finalized an agreement with BPX to dissolve its partnership in the Blackhawk field, which consolidates the company’s control over ~46,000 net acres in DeWitt County. The Eagle Ford asset holds about 550 of the company’s 700 remaining undrilled locations.
The venture was dissolved because of the anticipated reduction in D&C costs by over $2 million per well. Devon Energy Corp.’s (NYSE:DVN) Q4 2024 production outperformance was also driven by the timing and productivity of its Eagle Ford wells. The 2025 outlook emphasizes Eagle Ford’s importance, with a projected production of 383,000 BOE per day, while the overall company target for the year stands at 815,000 BOE per day.
Overall, DVN ranks 9th on our list of the best undervalued energy stocks to invest in now. While we acknowledge the growth potential of DVN, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than DVN but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.
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