In this article, we will take a look at the 5 best cheap oil stocks to buy in 2021. For a detailed analysis of the oil market and trends, go directly to the 10 best cheap oil stocks to buy in 2021.
5. Southwestern Energy Company (NYSE:SWN)
Number of Hedge Fund Holders: 21
Total Value of Hedge Fund Holdings: $148 Million
Share Price as of April 28: $4.25
Texas-based natural gas developer Southwestern Energy Company ranks five on the list of 10 best cheap oil stocks to buy in 2021. The company owns over 786,000 net acres in the Appalachia Basin. In 2020, the company purchased Montage Resources, an oil and gas company, in a $193 million deal. The acquisition resulted in over $30 million in general and administrative (G&A) synergies and retaining balance sheet resilience by stock market investments.
The company has a market cap of $2.6 billion. Shares of SWN surged 24.52% over the past twelve months. The company’s revenue in 2020 came in at $2.3 billion, a $700 million decrease compared to 2019 revenue. On April 23, Raymond James downgraded the stock from a “Market Perform” to an “Underperform.” At the same time, Morgan Stanley increased their price target on Southwestern Energy shares from $4.50 to $5.00.
4. Comstock Resources, Inc. (NYSE:CRK)
Number of Hedge Fund Holders: 22
Total Value of Hedge Fund Holdings: $87.1 Million
Share Price as of April 28: $5.23
Comstock Resources, Inc. ranks 4th on the list of 10 best cheap oil stocks to buy in 2021. The company owns around 309,000 net acres in the Haynesville and Bossier shale deposits that can yield natural gas. On March 15, Piper Sandler analyst Kashy Harrison downgraded Comstock Resources from Overweight to Neutral, with a $6.00 price target.
The company has a market cap of $1.11 billion and a revenue of $858 million in the full year of 2020. There were 22 hedge funds that reported owning stakes in Comstock Resources, Inc. at the end of the fourth quarter, down from 24 funds a quarter earlier. The total value of these stakes at the end of Q4 is $87.1 million.
3. Cenovus Energy Inc. (NYSE:CVE)
Number of Hedge Fund Holders: 23
Total Value of Hedge Fund Holdings: $238 Million
Share Price as of April 28: $7.51
Canada-based Cenovus Energy Inc. ranks 3rd on the list of 10 best cheap oil stocks to buy in 2021. The company owns oil sand ventures in Northern Alberta and oil exploration areas in Alberta and British Columbia. In 2020, the company entered into a $23.6 billion partnership with Husky Energy Inc, an integrated energy company, to create a leader in the integrated energy sector.
The company has a market cap of $19.0 billion. The stock has gained 146% in the last twelve months. Cenovus Energy Inc.’s revenue in 2020 came in at $9.87 billion. In March 2021, JPMorgan analyst Phil Gresh raised Cenovus Energy to Neutral from Underweight, with a price target of $13. According to the analyst, a Brent oil price in the $60s is a “sweet spot” for the Integrated Oils market, allowing demand to bounce back from COVID-19 while capital development is sustained. The collaboration resulted in cost and capital synergies of $1.2 billion, increased free funds flow production, and supported an investment-grade credit profile.
There were 23 hedge funds that reported owning stakes Cenovus Energy Inc. at the end of the fourth quarter, up from 18 funds a quarter earlier. The total value of these stakes at the end of Q4 is $238 million.
L1 Capital mentioned that they see great strategic value in the combination of high-quality and low-cost oil sands and heavy oil reserves with substantial midstream and downstream facilities following Cenovus Energy Inc.’s acquisition of Husky Energy in its Q4 2020 investor letter:
“Cenovus Energy (long +49%) is an integrated energy company that develops, produces and markets crude oil, natural gas liquids and natural gas, primarily in Canada. Cenovus shares rose as the oil prices continued to recover and as discounts for their production compared to the WTI price narrowed, driving strong free cash flow generation in Q4 after very weak Q2 and Q3 performance. We increased our shareholding after Cenovus announced the acquisition of Husky Energy in late October 2020, to create the third largest Canadian oil and natural gas producer. We see strong strategic merit in the combination which unites high-quality and low-cost oil sands and heavy oil assets with extensive midstream and downstream infrastructure. The transaction should be highly accretive and lead to substantial synergies, increased scale, more stable cash generation and reduced group leverage.”
2. Range Resources Corporation (NYSE:RRC)
Number of Hedge Fund Holders: 25
Total Value of Hedge Fund Holdings: $194 Million
Share Price as of April 28: $9.74
Range Resources Corporation (NYSE:RRC) ranks 2nd in our list of 10 best cheap oil stocks to buy in 2021. The energy company is a Marcellus Shale explorer and Pennsylvania’s most prolific natural gas drillers. In 2020, the company sold its Northern Louisiana assets to Terryville upstream for $245 million, plus contingent payments based on commodity prices. According to the terms of the contract, Range will keep midstream obligations for the duration of the contract.
Range Resources Corporation (NYSE:RRC) has a market cap of $1.96 billion and in the fourth quarter of 2020, the company’s revenue came in at $598.9 million. Shares of RRC climbed 60% over the past twelve months. On April 23, Raymond James Downgrades Range Resources to Underperform.
There were 25 hedge funds that reported owning stakes in Range Resources Corporation at the end of the fourth quarter, down from 23 funds a quarter earlier. The total value of these stakes at the end of Q4 is $194 million.
1. Falcon Minerals Corporation (NASDAQ:FLMN)
Number of Hedge Fund Holders: 26
Total Value of Hedge Fund Holdings: $30.2 Million
Share Price as of April 28: $4.52
Topping the 10 best cheap oil stocks to buy in 2021 is Falcon Minerals Corporation (NASDAQ:FLMN). The oil and gas minerals company owns over 256,000 gross unit acres in the Eagle Ford Shale and Austin Chalk in Karnes, DeWitt, and Gonzales Countries in Texas. In March 2021, Falcon Minerals Corporation (NASDAQ:FLMN) stock sold higher after Wells Fargo upgraded the stock from Equal-Weight to Overweight with an $8 price target.
The company has a market cap of $382 million. Falcon Minerals Corporation (NASDAQ:FLMN) revenue in the full year 2020 came in at $38.9 million. There were 26 hedge funds that reported owning stakes in Falcon Minerals Corporation at the end of the fourth quarter, up from 20 funds a quarter earlier. The total value of these stakes at the end of Q4 is $30.2 million.
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You can also take a peek at Tiger Cub Billionaire Stephen Mandel’s Top 10 Stock Picks and David Einhorn’s Top 10 Stock Picks.
