Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 5 stocks made the list for top value stocks in the Oil & Gas - Exploration and Production industry. Those looking for value stocks to add to their portfolio may want to use this list as a starting point for further investment research.

Why Focus on Undervalued Oil & Gas - Exploration and Production Stocks?

Value investors seek to buy stocks at a discount to their intrinsic value. Long-term returns show that such strategies are advantageous. Value stocks, as a group, tend to outperform growth stocks over extended periods of time. Typically, value investors perform financial analysis of numerous metrics, don’t follow the herd and are long-term investors.

AAII’s A+ Investor Value Grade is derived from a stock’s Value Score. The Value Score is the percentile rank of the average of the percentile ranks of the price-to-sales ratio, price-earnings ratio, enterprise-value-to-EBITDA (EV/EBITDA) ratio, shareholder yield, price-to-book-value ratio and price-to-free-cash-flow ratio. The score is variable, meaning it can consider all six ratios or, should any of the six ratios not be valid, the remaining ratios that are valid. To be assigned a Value Score, stocks must have a valid (non-null) ratio and corresponding ranking for at least two of the six valuation ratios.

What Goes Into AAII’s Value Grade?

Stock evaluation requires access to huge amounts of data as well as the knowledge and time to sift through it all, make sense of financial ratios, read income statements and analyze recent stock movement. AAII created A+ Investor, a robust data suite that condenses data research in an actionable and customizable way suitable for investors of all knowledge levels, to help investors with that task.

AAII’s proprietary stock grades come with A+ Investor. These offer intuitive A–F grades for more than just value. It is possible for a stock to appear cheap based on one valuation metric but appear expensive on another. It is also possible for one valuation ratio to be associated with outperforming stocks during certain periods of time but not others. Some stocks may even have null values for certain metrics like the price-earnings ratio or the price-to-book ratio but not others. An example of this would be a company with losses instead of profits or a negative book value because of heavy borrowing. Negative earnings or book value result in non-meaningful ratios that are left blank or null.

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5 Undervalued Oil & Gas - Exploration and Production Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 5 undervalued stocks in the Oil & Gas - Exploration and Production industry for Tuesday, March 12, 2024. Let’s take a closer look at their individual scores to see how they measure up against each other and the Oil & Gas - Exploration and Production industry median.

The Value Grade is assigned based on how each stock’s composite valuation compares to all other stocks.

The process for assigning grades starts with each variable for a given stock. The percentile rankings for all valid ratios that a stock has are calculated. So, for instance, a stock could have a price-to-book ranking in the 43rd percentile, a price-earnings ranking in the 67th percentile, a price-to-sales ranking in the 23rd percentile, etc. Then, those rankings are averaged for each stock. (A minimum of two valid variables are required, though all six will be used if available.)

Once the average of the individual variables is calculated, that average is ranked against all stocks. Put another way, each stock’s composite valuation is compared to all other stocks. These ranks are then sorted into quintiles from the cheapest 20% (a grade of A) to the most expensive 20% (a grade of F).

As always, we recommend that you conduct proper due diligence and research before investing in any security. We also suggest that investors utilize numerous grades, not just value, when it comes to deciding whether a company is a good fit for their allocation needs.

Battalion Oil Corp’s Value Grade

Value Grade:

Battalion Oil Corporation is an independent energy company. The Company is engaged in the acquisition, production, exploration and development of onshore oil and natural gas properties in the United States. The Company?s principal properties consist of leasehold interests in developed and undeveloped oil and natural gas properties and the reserves associated with these properties. The Company owns interests in developed and undeveloped oil and natural gas acreage in Texas locations. The Company?s working interests in approximately 40,375 net acres in the Delaware Basin in Pecos, Reeves, Ward and Winkler Counties, Texas. The Company has approximately 103 operated wells producing in this area in addition to minor working interests in 13 non-operated wells.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Battalion Oil Corp has a Value Score of 77, which is considered to be undervalued.

When you look at Battalion Oil Corp’s price-to-sales ratio at 0.38 compared to the industry median at 2.09, this company has a lower price relative to revenue compared to its peers. This could make Battalion Oil Corp’s stock more attractive for value investors.

Now, let’s assess Battalion Oil Corp’s EV/EBITDA ratio, also known as enterprise multiple. At 2.2, when compared to the industry median of 4.6, the company may be considered undervalued in relation to its peers. Value investors could use the enterprise multiple to identify stocks that are considered overvalued or undervalued relative to their industry.

Shareholder yield is the sum of a stock’s dividend yield (paid over previous 12 months minus special dividends) and the percentage of net share buybacks over the previous 12 months. Battalion Oil Corp’s shareholder yield is lower than its industry median ratio of 2.14%. Value investors may look for an attractive shareholder yield because it can be a powerful tool for identifying if the company has a good management team.

As one of the most common value metrics, the price-to-book ratio evaluates a company’s current market price relative to its book value. Battalion Oil Corp’s price-to-book ratio is higher than its industry median ratio of 1.30. This could make Battalion Oil Corp less attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Battalion Oil Corp’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Battalion Oil Corp’s price-to-free-cash-flow ratio is higher than its industry median ratio of 8.39. This could make Battalion Oil Corp less attractive because the higher P/FCF ratio indicates that Battalion Oil Corp is undervalued. The P/FCF ratio metric can also be viewed over a long-term time frame to see if the company's cash flow to share price value is generally improving or worsening.

CNX Resources Corp’s Value Grade

Value Grade:

CNX Resources Corporation is an independent low carbon intensity natural gas development, production, midstream and technology company centered in the Appalachian Basin. The majority of its operations are centered on unconventional shale formations, primarily the Marcellus Shale and Utica Shale, in Pennsylvania, Ohio and West Virginia. Additionally, it operates and develops Coalbed Methane (CBM) properties in Virginia. It has rights to extract natural gas from Shale formations in Pennsylvania, West Virginia, and Ohio from approximately 527,000 net Marcellus Shale acres and approximately 607,000 net Utica Shale acres. The Company holds approximately 53,000 acres of incremental Upper Devonian acres. It has rights to extract CBM in Virginia from approximately 278,000 net CBM acres. It extracts CBM natural gas primarily from the Pocahontas #3 seam. It has rights to extract natural gas from other Shale and shallow oil and gas formations, primarily in Illinois, Indiana, New York, and others.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

CNX Resources Corp has a Value Score of 79, which is considered to be undervalued.

CNX Resources Corp’s price-earnings ratio is 2.2 compared to the industry median at 8.3. This means that it has a lower price relative to its earnings compared to its peers. This makes CNX Resources Corp more attractive for value investors.

CNX Resources Corp’s price-to-book ratio is higher than its peers. This could make CNX Resources Corp less attractive for value investors when compared to the industry median at 1.30.

You can read more about CNX Resources Corp’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Devon Energy Corp’s Value Grade

Value Grade:

Devon Energy Corporation is an independent energy company. The Company is engaged primarily in the exploration, development and production of oil, natural gas and natural gas and natural gas liquids. The Company?s oil and gas properties include the Delaware Basin, Anadarko Basin, Williston Basin, Eagle Ford, and Powder River Basin. The Delaware Basin operates approximately 16 rigs that offer exploration and development opportunities from geologic reservoirs, including the Wolfcamp, Bone Spring, Avalon, and Delaware formations. The Company's Anadarko Basin is located primarily in Oklahoma?s Canadian, Kingfisher and Blaine counties. It operates approximately four rig programs associated with this joint venture. The Williston Basin is located on the Fort Berthold Indian Reservation in North Dakota, and its operations are focused on the oil-prone Bakken and Three Forks formations. The Eagle Ford operations are located in Texas DeWitt and Karnes counties.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Devon Energy Corp has a Value Score of 84, which is considered to be undervalued.

Devon Energy Corp’s price-earnings ratio is 8.0 compared to the industry median at 8.3. This means that it has a lower price relative to its earnings compared to its peers. This makes Devon Energy Corp more attractive for value investors.

Devon Energy Corp’s price-to-book ratio is lower than its peers. This could make Devon Energy Corp more attractive for value investors when compared to the industry median at 1.30.

You can read more about Devon Energy Corp’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Highpeak Energy Inc’s Value Grade

Value Grade:

HighPeak Energy, Inc. is an independent crude oil and natural gas company. The Company is engaged in the acquisition, development and production of crude oil, natural gas liquid (NGL) and natural gas reserves. The Company?s assets are primarily located in Howard and Borden Counties, Texas, which lie within the northeastern part of the crude oil-rich Midland Basin. Its acreage is composed of two core areas, Flat Top to the north and Signal Peak to the south. The Company, through Priority Power Management, LLC develops an electric high-voltage (EHV) substation, medium voltage distribution systems and a 13-megawatt direct current solar photovoltaic facility located on approximately 80 acres of land owned by the Company north of Big Spring, Texas in Howard County to provide for the Company?s electrical power needs in its Flat Top operating area including powering drilling rigs and day-to-day operations. It has over 100,000 net acres located primarily in Howard County.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Highpeak Energy Inc has a Value Score of 74, which is considered to be undervalued.

Highpeak Energy Inc’s price-earnings ratio is 10.0 compared to the industry median at 8.3. This means that it has a higher price relative to its earnings compared to its peers. This makes Highpeak Energy Inc less attractive for value investors.

Highpeak Energy Inc’s price-to-book ratio is higher than its peers. This could make Highpeak Energy Inc less attractive for value investors when compared to the industry median at 1.30.

You can read more about Highpeak Energy Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Talos Energy Inc’s Value Grade

Value Grade:

Talos Energy Inc. is a technically driven independent exploration and production company. The Company has its operations in the United States and offshore Mexico, both through upstream oil and gas exploration and production and the development of carbon capture and sequestration (CCS) opportunities. The Company operates through the exploration and production of oil, natural gas and natural gas liquid (NGLs) segment (Upstream Segment). It has operations across a range of Deepwater and shallow water assets in both the United States and Mexico. Its area of focus in the United States is the Gulf of Mexico Deepwater and its core areas are Green Canyon, Mississippi Canyon and Shelf and Gulf Coast. Green Canyon is a Deepwater region in the Central United States, Gulf of Mexico. Mississippi Canyon is a Deepwater region in the eastern portion of the Central United States, Gulf of Mexico. Its CCS portfolio includes multiple future project sites along the United States Gulf Coast.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Talos Energy Inc has a Value Score of 76, which is considered to be undervalued.

Talos Energy Inc’s price-earnings ratio is 7.8 compared to the industry median at 8.3. This means that it has a lower price relative to its earnings compared to its peers. This makes Talos Energy Inc more attractive for value investors.

Talos Energy Inc’s price-to-book ratio is higher than its peers. This could make Talos Energy Inc less attractive for value investors when compared to the industry median at 1.30.

You can read more about Talos Energy Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Other Oil & Gas - Exploration and Production Stock Grades

Value is just one of the five Stock Grades included in our A+ Investor service. AAII members can see the top-graded stocks—those with grades of A or B for value, growth, momentum, earnings estimate revisions and quality—on the A+ Stock Grades Screener.

Also, if you want full access to all of AAII’s premium services, you can subscribe to one convenient bundled plan called AAII Platinum where you can try out A+ Investor, AAII Dividend Investing, the Stock Superstars Report, Growth Investing and VMQ Stocks. With the other premium services, you can dive deep into additional metrics, portfolios, commentary and information about Oil & Gas - Exploration and Production stocks as well as other industrys.

Choosing Which of the 5 Best Oil & Gas - Exploration and Production Stocks Is Right for You

Choosing which value stocks to invest in will ultimately depend on your individual goals and allocation; however, comparing similar value stocks in the same industry can help you analyze which might be better investments for you in the long run. So, let’s take a look at the Value Grade for all of our stocks.

• Battalion Oil Corp stock has a Value Grade of B.
• CNX Resources Corp stock has a Value Grade of B.
• Devon Energy Corp stock has a Value Grade of A.
• Highpeak Energy Inc stock has a Value Grade of B.
• Talos Energy Inc stock has a Value Grade of B.

Now that you have a bit more background about each of the 5 undervalued stocks in the Oil & Gas - Exploration and Production industry as well as their overall grades, it’s time for you to conduct additional research to see if these could fit your portfolio needs based on your goals and risk tolerance. AAII can help you figure out both and identify which investments align with what works best for you.

We do so through a program of education that teaches you to invest for yourself and become an effective manager of your own wealth—no more relying on others for your financial independence. You can rely on AAII for timeless articles on financial planning and stock-picking, unbiased research and actionable analysis that makes you a better investor.

A+ Investor adds to that qualitative teaching by giving you a powerful data suite that helps you whittle down investment decisions to find stocks, exchange-traded funds (ETFs) or mutual funds that meet your needs.

Additional Resources About Oil & Gas - Exploration and Production Stocks

Want to learn more about Oil & Gas - Exploration and Production stocks to see if they could be the right investment for you? Check out some additional resources and articles to help you on your financial journey.

• 5 Undervalued Oil & Gas - Exploration and Production Stocks for Tuesday, March 12
• 6 Undervalued Oil & Gas - Exploration and Production Stocks for Monday, March 11
• Why Amplify Energy Corp’s (AMPY) Stock Is Up 15.92%
• Why Berry Corporation (Bry)’s (BRY) Stock Is Up 4.27%

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