5 Most Undervalued Natural Gas Stocks To Buy According To Hedge Funds

In this article, we discuss 5 most undervalued natural gas stocks to buy according to hedge funds. If you want to see more stocks in this selection, check out 11 Most Undervalued Natural Gas Stocks To Buy According To Hedge Funds. 

5. ConocoPhillips (NYSE:COP)

Number of Hedge Fund Holders: 64

P/E Ratio as of January 20: 8.65

ConocoPhillips (NYSE:COP) was founded in 1917 and is headquartered in Houston, Texas. The company explores for, produces, transports, and markets crude oil, bitumen, natural gas, liquefied natural gas, and natural gas liquids worldwide. On January 12, ConocoPhillips (NYSE:COP) and Venezuelan national oil company PdVSA are considering a proposal that could allow the U.S. company to load, transport, and sell Venezuela’s oil in the United States, which would give ConocoPhillips (NYSE:COP) a chance to recover the money it lost in Venezuela and help the U.S. meet its energy needs. It is one of the most undervalued natural gas stocks to invest in according to elite hedge funds. 

On January 19, Truist analyst Neal Dingmann maintained a Buy recommendation on ConocoPhillips (NYSE:COP) but lowered the firm’s price target on the shares to $148 from $155. He expects ConocoPhillips (NYSE:COP)’s Q4 results to be impacted by volume and pricing challenges similar to those reported by some of its peers. However, he anticipates that the company’s 2023 EBITDA and earnings per share will be higher than the Street’s estimates. 

According to Insider Monkey’s Q3 data, 64 hedge funds were long ConocoPhillips (NYSE:COP), compared to 71 funds in the prior quarter. Ken Fisher’s Fisher Asset Management is the largest position holder in the company, with approximately 7 million shares worth $708.5 million. 

In its Q1 2022 investor letter, Diamond Hill Capital, an asset management firm, highlighted a few stocks and ConocoPhillips (NYSE:COP) was one of them. Here is what the fund said:

“We redeployed capital into ConocoPhillips (NYSE:COP), which was trading at a discount to our estimate of intrinsic value and is well positioned over the long run due to its low-risk asset base.”

4. Antero Resources Corporation (NYSE:AR)

Number of Hedge Fund Holders: 65

P/E Ratio as of January 20: 4.53

Antero Resources Corporation (NYSE:AR) is a Colorado-based independent oil and natural gas company that acquires, explores for, develops, and produces natural gas, natural gas liquids, and oil properties in the United States. It is one of the most undervalued natural gas stocks to invest in according to hedge funds. 

On January 9, Mizuho analyst Nithin Kumar initiated  coverage of Antero Resources Corporation (NYSE:AR) with a Buy rating and a price target of $51, up from $47. Management has successfully navigated the commodity downcycle and reduced balance sheet leverage since 2020, the analyst told investors in a research note.

According to Insider Monkey’s data, 65 hedge funds were bullish on Antero Resources Corporation (NYSE:AR) at the end of September 2022, compared to 64 funds in the prior quarter. D E Shaw is the biggest stakeholder of the company, with 3.7 million shares worth $114.2 million. 

TimesSquare Capital made the following comment about Antero Resources Corporation (NYSE:AR) in its Q3 2022 investor letter:

“New to the portfolio this quarter is Antero Resources Corporation (NYSE:AR), a natural gas focused exploration and production company with operations in Pennsylvania and Ohio. The continued buildout of U.S. liquefied natural gas stems from utility plants switching from coal to natural gas and European demand.”

3. Chesapeake Energy Corporation (NASDAQ:CHK)

Number of Hedge Fund Holders: 70

P/E Ratio as of January 20: ​​5.60

Chesapeake Energy Corporation (NASDAQ:CHK) is an Oklahoma-based independent exploration and production company, engaged in the acquisition, exploration, and development of properties for the production of oil, natural gas, and natural gas liquids from underground reservoirs in the United States. On January 19, Chesapeake Energy Corporation (NASDAQ:CHK) announced its agreement to sell assets in the Brazos Valley region of the Eagle Ford shale to WildFire Energy for $1.425 billion, which will potentially be the first of multiple sales of the company’s Eagle Ford position. Chesapeake Energy Corporation (NASDAQ:CHK) is one of the most undervalued natural gas stocks to buy according to hedge funds. 

On January 19, Credit Suisse analyst William Janela trimmed the firm’s price target on Chesapeake Energy Corporation (NASDAQ:CHK) to $130 from $135 after the company announced that it will sell its Eagle Ford Brazos Valley assets for $1.425 billion in cash. The analyst maintained an Outperform rating on the shares.

According to Insider Monkey’s Q3 data, Chesapeake Energy Corporation (NASDAQ:CHK) was part of 70 hedge fund portfolios, compared to 67 in the prior quarter. Howard Marks’ Oaktree Capital Management is the biggest stakeholder of the company, with 9.80 million shares worth $923.25 million. 

Carillon Tower Advisers made the following comment about Chesapeake Energy Corporation (NASDAQ:CHK) in its Q3 2022 investor letter:

“Chesapeake Energy Corporation (NASDAQ:CHK), a natural gas exploration and production company, emerged from bankruptcy with little fanfare in 2021, despite having rid itself of its debt burden and onerous pipeline contracts. The company was able to make two large acquisitions at very reasonable prices within its core producing areas, allowing for scale and cost savings. Then in 2022, natural gas prices began to rise well above expectations, increasing the value of Chesapeake’s large natural gas resources and production and contributing to its outperformance.”

2. Occidental Petroleum Corporation (NYSE:OXY)

Number of Hedge Fund Holders: 74

P/E Ratio as of January 20: 5.51

Occidental Petroleum Corporation (NYSE:OXY) is a Texas-based company that engages in the acquisition, exploration, and development of oil and gas properties in the United States, the Middle East, Africa, and Latin America. The company operates through three segments – Oil and Gas, Chemical, and Midstream and Marketing. Occidental Petroleum Corporation (NYSE:OXY) was one of the top two percentage gainers from the S&P 500 in 2022, with shares gaining more than double in value during the year. 

On January 9, Mizuho analyst Nitin Kumar initiated coverage of Occidental Petroleum Corporation (NYSE:OXY) with a Buy rating and a price target of $82, up from $81. The analyst believes that Occidental deserves to be compared to companies like InterOil (IOC) and offshore peers, rather than larger independent exploration and production companies. They also believe that Occidental Petroleum Corporation (NYSE:OXY)’s lower sustaining capital expenditure and deep reserve base will allow it to manage cash flow priorities such as growth projects, debt reduction, and equity shareholder returns.

According to Insider Monkey’s data, Occidental Petroleum Corporation (NYSE:OXY) was part of 74 hedge fund portfolios at the end of Q3 2022, compared to 66 in the prior quarter. Warren Buffett’s Berkshire Hathaway is the largest stakeholder of the company, with 194.35 million shares worth nearly $12 billion as of the end of September last year. 

Here is what Smead Value Fund has to say about Occidental Petroleum Corporation (NYSE:OXY) in its Q3 2022 investor letter:

“Our top-performing stocks in the quarter include Occidental Petroleum (NYSE:OXY). Oil and gas have been the best game in the stock market town this year and it was a pleasant surprise to see home builders pick up even with dour news on interest rates and the economy. For the first three quarters of the year, we should change the name of our fund to the Jed Clampett Fund. Occidental Petroleum (NYSE:OXY), was one of the standouts. Up through the bear market came a “bubblin’ crude!”

1. Exxon Mobil Corporation (NYSE:XOM)

Number of Hedge Fund Holders: 75

P/E Ratio as of January 20: 9.10

Exxon Mobil Corporation (NYSE:XOM) is one of the most undervalued natural gas stocks to invest in according to hedge funds. On January 17, Exxon Mobil Corporation (NYSE:XOM) confirmed that it is preparing to authorize its fifth oil production project in Guyana and may acquire additional exploration acreage. The development will cost approximately $12.7 billion, with first oil projected to flow by 2027 and continue for 20 years.

On January 17, Scotiabank analyst Paul Cheng upgraded Exxon Mobil Corporation (NYSE:XOM) to Outperform from Sector Perform and raised the price target to $135 from $120. The analyst believes that Exxon will see improved cash flow generation from refining, which would benefit the company as it has the most refining exposure among the oil and gas supermajors. He also notes that Exxon Mobil Corporation (NYSE:XOM) is less affected by market volatility compared to other companies in the sector, making it a good choice during a risk-off trade.

According to Insider Monkey’s third quarter database, 75 hedge funds were long Exxon Mobil Corporation (NYSE:XOM), compared to 72 funds in the prior quarter. Rajiv Jain’s GQG Partners is the biggest stakeholder of the company, with 33.8 million shares worth approximately $3 billion. 

In its Q2 2022 investor letter, First Eagle Investments, an asset management firm, highlighted a few stocks and Exxon Mobil Corporation (NYSE:XOM) was one of them. Here is what the fund said:

“Integrated oil and gas giant Exxon Mobil Corporation (NYSE:XOM) performed well in the second quarter as continued high prices for energy products supported the stock. As the largest refiner in the US, the company has benefitted from wide “crack spreads,” or the margin between the cost of crude oil and the petroleum products extracted from it. Exxon continues to invest in refining capacity in the US, which industry wide has been in steady decline since 2019. We are pleased that Exxon has been using its strong cash flows to reduce debt and to return cash to shareholders through dividends and stock repurchases.”

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