In this article, we discuss 10 cheap oil stocks to buy in 2022. If you want to skip our detailed analysis of these stocks, go directly to 5 Cheap Oil Stocks to Buy in 2022.
Oil prices have climbed above $90 per barrel, contributing to the rise in inflation but also bringing oil stocks back into the limelight on Wall Street. The mantra around energy transitions, ESG goals, and a freeze on new investments in the oil sector has been shifted to the back burner as institutional investors seek to profit from this boom. On February 14, Fatih Birol, head of the International Energy Agency (IEA), urged OPEC countries, some of which have not been meeting production targets, to close the gap between their “words and actions”.
The political crisis in Ukraine has helped oil climb higher as fears of a possible Russian invasion of the country rise. Speculation is rife about the invasion and the threat of the US and European sanctions on Russia. Since Russia is a leading oil-producing country, these sanctions would have a huge impact on global oil prices. OPEC countries have repeatedly failed to meet production targets of 400,000 barrels per day, driving the price of oil even higher. Overall, most analysts have turned bullish on the oil sector for 2022.
For those who cannot afford some of the pricier oil stocks on the market, there are several cheaper alternatives that offer the same growth potential but at lower prices. Some of the cheap oil stocks to buy in 2022 include PHX Minerals Inc. (NYSE:PHX), Helix Energy Solutions Group, Inc. (NYSE:HLX), and Southwestern Energy Company (NYSE:SWN), among others discussed in detail below.
Our Methodology
The companies that operate in the oil sector and are trading at relatively cheap prices compared to peers were selected for the list. The business fundamentals and analyst ratings for these firms are also discussed to provide readers with some additional context for their investment choices. All the stocks listed below are priced under $25 per share as of February 14. The share price of each stock is mentioned alongside other details about the companies for further clarity.
Data from around 900 elite hedge funds tracked by Insider Monkey in the third quarter of 2021 was used to identify the number of hedge funds that hold stakes in each firm.
Photo by Zbynek Burival on Unsplash
Cheap Oil Stocks to Buy in 2022
10. Enterprise Products Partners L.P. (NYSE:EPD)
Number of Hedge Fund Holders: 25
Real-Time Share Price as of February 14: $24.68
Enterprise Products Partners L.P. (NYSE:EPD) provides midstream energy services. On January 10, the company announced that it had agreed to purchase Navitas Midstream Partners, another energy business, from private equity firm Warburg Pincus in a deal worth $3.2 billion. Enterprise Products Partners L.P. (NYSE:EPD) also recently posted earnings for the fourth quarter of 2021, beating market estimates on revenue by $1.70 billion.
Enterprise Products Partners L.P. (NYSE:EPD) has an impressive dividend history. It has paid a growing dividend to shareholders for the past 23 years. On January 6, the firm declared a quarterly dividend of $0.465 per share, an increase of 3.3% from the previous dividend.
At the end of the third quarter of 2021, 25 hedge funds in the database of Insider Monkey held stakes worth $233 million in Enterprise Products Partners L.P. (NYSE:EPD), compared to 28 in the previous quarter worth $246 million.
Among the hedge funds being tracked by Insider Monkey, New York-based firm First Eagle Investment Management is a leading shareholder in Enterprise Products Partners L.P. (NYSE:EPD), with 2.8 million shares worth more than $61 million.
Just like PHX Minerals Inc. (NYSE:PHX), Helix Energy Solutions Group, Inc. (NYSE:HLX), and Southwestern Energy Company (NYSE:SWN), Enterprise Products Partners L.P. (NYSE:EPD) is one of the stocks on the radar of institutional investors as energy prices rise to new highs.
In its Q1 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Enterprise Products Partners L.P. (NYSE:EPD) was one of them. Here is what the fund said:
“While reducing in health care and consumer staples, we increased our exposure to high-quality names in economically sensitive areas of the market. We added to low-cost, high-quality energy names (including) Enterprise Products Partners LP. We are positive on this company’s strong balance sheets, competitive positions and exposure to an economic recovery.”
9. Marathon Oil Corporation (NYSE:MRO)
Number of Hedge Fund Holders: 40
Real-Time Share Price as of February 14: $22.21
Marathon Oil Corporation (NYSE:MRO) is an independent oil and gas exploration and production firm. The stock has gained in the past few weeks as the Ukraine crisis in Europe escalates. A decision by OPEC countries to raise production as expected in early January also helped the firm. Prominent investor Jim Cramer has identified Marathon Oil Corporation (NYSE:MRO) as one of the winners of 2022 as well.
On January 25, Barclays analyst Jeanine Wai kept an Overweight rating on Marathon Oil Corporation (NYSE:MRO) stock and raised the price target to $20 from $18, backing the firm to deliver solid earnings results for the fourth quarter of 2021.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm DE Shaw is a leading shareholder in Marathon Oil Corporation (NYSE:MRO), with 10.5 million shares worth more than $144 million.
At the end of the third quarter of 2021, 40 hedge funds in the database of Insider Monkey held stakes worth $903 million in Marathon Oil Corporation (NYSE:MRO), up from 34 in the previous quarter worth $655 million.
8. Vermilion Energy Inc. (NYSE:VET)
Number of Hedge Fund Holders: 11
Real-Time Share Price as of February 14: $17.55
Vermilion Energy Inc. (NYSE:VET) is a Canada-based oil and gas firm. It owns energy projects spread as far wide as North America, Europe, and Australia. The company was founded in 1994 and is headquartered in Calgary. The stock has climbed close to 200% in the past year as rising energy prices and a resurgence in demand help oil firms. In November 2021, Vermilion Energy Inc. (NYSE:VET) had announced it would be reinstating the quarterly dividend from 2022.
On February 4, investment advisory National Bank kept an Outperform rating on Vermilion Energy Inc. (NYSE:VET) stock and raised the price target to C$34 from C$30. Analyst Travis Wood issued the ratings update.
Among the hedge funds being tracked by Insider Monkey, Boston-based firm Arrowstreet Capital is a leading shareholder in Vermilion Energy Inc. (NYSE:VET), with 3 million shares worth more than $30 million.
At the end of the third quarter of 2021, 11 hedge funds in the database of Insider Monkey held stakes worth $86 million in Vermilion Energy Inc. (NYSE:VET), compared to 12 in the previous quarter worth $51 million.
7. Enerplus Corporation (NYSE:ERF)
Number of Hedge Fund Holders: 18
Real-Time Share Price as of February 14: $12.07
Enerplus Corporation (NYSE:ERF) engages in the development of crude oil and natural gas properties. It operates from Canada. The company recently announced that it was considering a plan to divest Canadian assets as part of a larger strategy to focus on business in the United States. The assets of the firm in Alberta and Saskatchewan produced only 7% of the total output in the past year. The firm will conclude the sales process by mid-2022.
Enerplus Corporation (NYSE:ERF) has paid a dividend payout to shareholders for more than two decades. On November 4, the firm declared a quarterly dividend of C$0.041 per share, an increase of 8% from the previous dividend of C$0.038.
At the end of the third quarter of 2021, 18 hedge funds in the database of Insider Monkey held stakes worth $169 million in Enerplus Corporation (NYSE:ERF), the same as in the previous quarter worth $197 million.
Among the hedge funds being tracked by Insider Monkey, Boston-based firm Adage Capital Management is a leading shareholder in Enerplus Corporation (NYSE:ERF), with 8 million shares worth more than $64 million.
6. Comstock Resources, Inc. (NYSE:CRK)
Number of Hedge Fund Holders: 24
Real-Time Share Price as of February 14: $7.60
Comstock Resources, Inc. (NYSE:CRK) is a Texas-based independent energy company. In early November, the firm posted earnings for the third quarter of 2021, reporting earnings per share of $0.34, in line with market estimates. Revenue over the period came in at $511 million, up more than 187% year-on-year and beating estimates by $107 million. In October 2021, the firm sold assets it owned in North Dakota to Northern Gas and Oil in a deal worth $154 million.
On January 3, Mizuho analyst Vincent Lovaglio maintained a Buy rating on Comstock Resources, Inc. (NYSE:CRK) stock with a price target of $13, noting that the energy sector was poised for another year of outperformance relative to the broader market.
At the end of the third quarter of 2021, 24 hedge funds in the database of Insider Monkey held stakes worth $153 million in Comstock Resources, Inc. (NYSE:CRK), up from 20 in the preceding quarter worth $145 million.
Among the hedge funds being tracked by Insider Monkey, New York-based firm Slate Path Capital is a leading shareholder in Comstock Resources, Inc. (NYSE:CRK), with 3.5 million shares worth more than $37 million.
Along with PHX Minerals Inc. (NYSE:PHX), Helix Energy Solutions Group, Inc. (NYSE:HLX), and Southwestern Energy Company (NYSE:SWN), Comstock Resources, Inc. (NYSE:CRK) is one of the oil stocks that hedge funds are buying.
Click to continue reading and see 5 Cheap Oil Stocks to Buy in 2022.
Suggested Articles:
Disclosure. None. 10 Cheap Oil Stocks to Buy in 2022 is originally published on Insider Monkey.
