10 Best Undervalued Energy Stocks To Buy According to Hedge Funds

7. Diamondback Energy, Inc. (NYSE:FANG)

Number of Hedge Fund Investors: 49

Forward P/E Ratio as of December 16: 11.31

Diamondback Energy, Inc. (NYSE:FANG) is a leading independent oil and natural gas producer with operations concentrated in the Permian Basin. The company generates revenue from selling oil, natural gas, and NGLs.

Diamondback Energy, Inc. (NASDAQ:FANG) is focusing on infrastructure and transportation improvements to access higher-value markets for its gas. In Q3, the company secured substantial capacity on key pipelines, including Whistler and Matterhorn, with approximately 250 million cubic feet of gas per day of capacity. This ensures that a significant portion of the company’s gas production can reach markets where it can command better prices. Moreover, the company holds a 10% stake in the upcoming Blackcomb pipeline, which will transport gas from the Permian Basin to South Texas and is expected to become operational in the coming years.

Diamondback Energy, Inc. (NASDAQ:FANG) is also exploring innovative strategies to enhance the value of its gas production. One such initiative involves the development of power generation facilities using its natural gas resources. By converting natural gas into electricity, the company aims to achieve higher margins and protect its operations from gas price volatility. The company is currently collaborating with data center operators and other potential partners to develop power solutions that leverage the low-cost gas available in the Permian Basin.

Diamondback Energy, Inc. (NASDAQ:FANG) is also evaluating opportunities to monetize its midstream assets, including the potential drop-down of mineral interests to its subsidiary, Viper Energy Partners, and further investments in the EPIC pipeline and the Deep Blue Midland Basin.