In this article, we discuss 5 undervalued and cheap energy stocks to buy now. If you want to see more stocks in this list, check out 10 Undervalued and Cheap Energy Stocks to Buy Now.
5. Magnolia Oil & Gas Corporation (NYSE:MGY)
Number of Hedge Fund Holders: 22
P/E Ratio as of September 13: 6.32
Share Price as of September 13: $23.58
Magnolia Oil & Gas Corporation (NYSE:MGY) is a Texas-based company specializing in the acquisition, development, and production of oil, natural gas, and natural gas liquids reserves in the United States. On August 2, the company reported a Q2 GAAP EPS of $1.32, exceeding consensus estimates by $0.15. The revenue climbed 93.3% year over year to $484.65 million, topping market forecasts by $25.05 million. Magnolia Oil & Gas Corporation (NYSE:MGY) also declared a $0.10 per share dividend, which was paid on September 1.
MKM Partners analyst Leo Mariani on July 20 assumed coverage of Magnolia Oil & Gas Corporation (NYSE:MGY) with a Buy rating and a $26 price target as part of a broader research note on Exploration & Production names. The analyst remained positive on the company’s “high per share production growth, upside potential in the Austin Chalk play, best in class balance sheet, and strong, consistent returns of capital to shareholders”.
According to Insider Monkey’s Q2 data, 22 hedge funds were long Magnolia Oil & Gas Corporation (NYSE:MGY), with combined stakes worth $177.2 million. Amy Minella’s Cardinal Capital is the leading position holder in the company, with 3.85 million shares worth about $81 million.
Here is what Wasatch Ultra Growth Fund has to say about Magnolia Oil & Gas Corporation (NASDAQ:MGY) in its Q1 2022 investor letter:
“Another strong stock in the Fund was Magnolia Oil & Gas Corp. (NASDAQ:MGY). Operating primarily in oil-rich South Texas, the company engages in the development, exploration and production of oil and natural gas. Sharply higher prices for oil and gas boosted Magnolia’s share price during the first quarter. We’re impressed by the company’s disciplined management team and consistent record of returning cash to shareholders regardless of the price of oil.”
4. Comstock Resources, Inc. (NYSE:CRK)
Number of Hedge Fund Holders: 25
P/E Ratio as of September 13: 16.86
Share Price as of September 13: $20.06
Comstock Resources, Inc. (NYSE:CRK) was incorporated in 1919 and is headquartered in Frisco, Texas. It is an independent energy company focusing on the acquisition, exploration, and production of oil and natural gas mainly in North Louisiana and East Texas. On August 1, Comstock Resources, Inc. (NYSE:CRK) posted a Q2 Non-GAAP EPS of $1.00 and a revenue of $946.25 million, outperforming market consensus by $0.05 and $318.45 million, respectively. It is a notable cheap and undervalued energy stock to consider in the current market backdrop.
On September 13, Stifel analyst Derrick Whitfield raised the price target on Comstock Resources, Inc. (NYSE:CRK) to $27 from $22 and reaffirmed a Buy rating on the shares. The analyst added the stock to the firm’s “Select List” after Comstock Resources, Inc. (NYSE:CRK)’s Q2 earnings and a detailed technical review of its Western Haynesville area. The analyst sees Comstock Resources, Inc. (NYSE:CRK) as “the best vehicle to express a bullish view on the convergence of U.S. and international natural gas prices” given its expanding resource base and advantaged proximity relative to the Gulf Coast.
Among the hedge funds tracked by Insider Monkey, 25 funds were long Comstock Resources, Inc. (NYSE:CRK) at the end of June 2022, with combined stakes worth $144 million. D E Shaw is the largest stakeholder of the company, with more than 4 million shares worth $50 million.
3. Enerplus Corporation (NYSE:ERF)
Number of Hedge Fund Holders: 25
P/E Ratio as of September 13: 7.15
Share Price as of September 13: $15.60
Enerplus Corporation (NYSE:ERF) is a Canadian company engaged in the exploration and development of crude oil and natural gas in the United States and Canada. The firm’s properties are located primarily in North Dakota, Colorado, Pennsylvania, Alberta, British Columbia, and Saskatchewan. With shares worth $15.60 as of September 13, and a price to earnings ratio of 7.15, Enerplus Corporation (NYSE:ERF) is one of the top undervalued and cheap energy stocks to buy now.
On August 4, Enerplus Corporation (NYSE:ERF) declared a $0.05 per share quarterly dividend, a 16.3% increase from its prior dividend of $0.04. The dividend is payable on September 15, to shareholders of record on August 31.
Stifel analyst Cody Kwong raised the price target on Enerplus Corporation (NYSE:ERF) on August 8 to C$32 from C$30 and maintained a Buy rating on the shares.
According to Insider Monkey’s data, Enerplus Corporation (NYSE:ERF) was part of 25 hedge fund portfolios at the end of Q2 2022, up from 22 funds in the last quarter. Phill Gross and Robert Atchinson’s Adage Capital Management is the largest stakeholder of the company, with 7.8 million shares worth $103.7 million.
2. Energy Transfer LP (NYSE:ET)
Number of Hedge Fund Holders: 36
P/E Ratio as of September 13: 9.64
Share Price as of September 13: $12.06
Energy Transfer LP (NYSE:ET) owns and operates natural gas transportation pipelines and natural gas storage facilities. The company also sells natural gas to electric utilities, independent power plants, and industrial users. Energy Transfer LP (NYSE:ET) provides crude oil transportation, middle distillate, motor fuels, and other petroleum products as well. It is one of the best undervalued and cheap energy stocks to buy.
On August 24, Energy Transfer LP (NYSE:ET) announced that it signed a 20-year agreement with Shell plc (NYSE:SHEL) to supply 2.1 million metric tons per year of liquefied natural gas from its Lake Charles LNG export project in Louisiana. The first deliveries are projected to begin as early as 2026. Energy Transfer LP (NYSE:ET) has been expanding vigorously this year, with plans to ultimately restart its earlier dividend distribution.
Barclays analyst Theresa Chen on August 16 raised the price target on Energy Transfer LP (NYSE:ET) to $14 from $13 and reaffirmed an Overweight rating on the shares. The analyst believes there are still unique tailwinds within the firm’s North American midstream and refining coverage and that U.S. refining fundamentals will continue to fare well.
According to Insider Monkey’s data, 36 hedge funds were long Energy Transfer LP (NYSE:ET) at the end of Q2 2022, up from 31 funds in the last quarter. David Abrams’ Abrams Capital Management is the leading stakeholder of the company, with more than 22 million shares worth $220.80 million.
Miller Value Partners, an investment firm, talked about Energy Transfer L.P. (NYSE:ET) in its Q2 2021 investor letter. Here is what the fund said:
“Energy Transfer LP (ET) rose over the period along with the price of oil climbing 40.59% over the period. The company received positive news that the Dakota Access Pipeline project would not be shut down while the Environmental Impact Statement by the US Army Corps of Engineers is drawn up. Energy Transfer reported strong 1Q results with revenue of $17B surpassing expectations for $11.8B with adjusted earnings before income, taxes, depreciation and amortization (EBITDA) hitting $5.04B ahead of consensus of $2.77B. The company raised full year adjusted EBITDA guidance to $12.9-13.3B from $10.6-11.0B previously, with the increase largely related to the benefits realized from Winter Storm Uri. The company paid down $3.7B in debt during the quarter, using strong cash flow to reduce leverage. The company also announced the issuance of $900M in 6.5% Series H perpetual preferreds with the company using the proceeds to repay debt and for general purposes.”
1. Cenovus Energy Inc. (NYSE:CVE)
Number of Hedge Fund Holders: 42
P/E Ratio as of September 13: 11.82
Share Price as of September 13: $18.67
Cenovus Energy Inc. (NYSE:CVE) is a Canadian energy firm that produces and markets crude oil, natural gas liquids, and natural gas in Canada, the United States, and the Asia Pacific. The company operates through Oil Sands, Conventional, Offshore, Canadian Manufacturing, U.S. Manufacturing, and Retail segments. On September 13, Cenovus Energy Inc. (NYSE:CVE) declared a C$0.105 per share quarterly dividend, in line with previous. The dividend is payable on September 29, to shareholders of record as of September 15.
On August 10, Credit Suisse analyst William Janela assumed coverage of Cenovus Energy Inc. (NYSE:CVE) with an Outperform rating and a price target of C$37.
According to Insider Monkey’s data, 42 hedge funds were bullish on Cenovus Energy Inc. (NYSE:CVE) at the end of the second quarter of 2022, compared to 44 funds in the last quarter. Eric W. Mandelblatt’s Soroban Capital Partners is the leading stakeholder of the company, with 50.3 million shares worth $957 million.
Here is what L1 Capital Long Short Fund Limited has to say about Cenovus Energy Inc. (NYSE:CVE) in its Q4 2021 investor letter:
“Detailed, bottom-up stock research remains the investment team’s primary focus and the core driver of portfolio performance. 2021 once again demonstrated the team’s ability to identify ‘winners’ through extensive company and industry research across a diverse range of sectors. Key contributors included Cenovus Energy, (due to) recovering oil price leading to improved investor sentiment, consensus earnings upgrades and strong free cash flow generation.”
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