8 Best Undervalued Energy Stocks To Buy According to Analysts

4. Shell plc (NYSE:SHEL)

Average Analyst Estimates as of May 28: $90.33

Average Analyst Upside as of May 28: 24.75%

P/E Ratio: 13.39

Shell plc (NYSE:SHEL) is a global leader in the energy and petrochemical sectors, operating across various segments such as Integrated Gas, Upstream, Marketing, Chemicals and Products, and Renewables and Energy Solutions. The company’s activities include the exploration and extraction of crude oil, natural gas, and natural gas liquids, as well as the marketing, transportation, and trading of these essential resources.

On May 2, Shell plc (NYSE:SHEL) reported a first-quarter profit of $7.7 billion, significantly exceeding expectations due to disruptions in the Red Sea and Russia that boosted oil refining and trading. The company also announced plans to repurchase an additional $3.5 billion of its shares over the next three months, maintaining the same rate as the previous quarter. On the other hand, the company’s cash flow increased by 6% from the previous quarter to $13.3 billion, reflecting strong operational performance. This, along with robust trading, helped offset the impact of declining natural gas prices that affected the earnings of its rivals.

A few weeks after the earnings report, JPMorgan highlighted that first-quarter cash generation for European oil companies met expectations, with the Wall Street firm’s post-reporting forecasts, based on assumptions of $80 per barrel for oil and €35 per megawatt-hour for EU gas, suggesting that earnings per share expectations were well-supported, with predictions aligning for 2024 and rising by 5% for 2025. In that regard, JPMorgan favors companies with exposure to oil and globally advantaged liquefied natural gas (LNG) over spot gas, recommending overweight positions in Shell plc (NYSE:SHEL).

By the end of the first quarter of this year, 50 out of the 919 hedge funds tracked by Insider Monkey held stakes in Shell plc (NYSE:SHEL). The largest stakeholder among them was Ken Fisher’s Fisher Asset Management, with a $1.56 billion investment.