Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 3 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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3 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 3 undervalued stocks in the Oil & Gas - Exploration and Production industry for Monday, April 29, 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.

Harbour Energy PLC (ADR)’s Value Grade

Value Grade:

Harbour Energy plc is a United Kingdom-based independent oil and gas company. The Company's principal activities are the acquisition, exploration, development and production of oil and gas reserves in the United Kingdom and Norwegian Continental Shelves, Indonesia, Vietnam, and Mexico. Its North Sea portfolio comprises a mixture of producing assets, development, and pre-development projects, as well as near-field exploration opportunities. Its International portfolio includes assets in Indonesia and Vietnam and interests in Mexico. The Company's UK offshore operated positions include the Greater Britannia Area, J-Area, AELE, Catcher Area and Tolmount Area. Its other UK North Sea interests include East Irish Sea, Galleon, Ravenspurn North, and Johnston. It has an operating interest in the Tuna field and acreage in the South Andaman Sea gas play. It also has an interest in the Zama field in Mexico's Sureste basin. Its operations in Vietnam are focused on its Chim Sao and Dua oil fields.

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.

Harbour Energy PLC (ADR) has a Value Score of 80, which is considered to be undervalued.

When you look at Harbour Energy PLC (ADR)’s price-to-sales ratio at 0.82 compared to the industry median at 2.34, this company has a lower price relative to revenue compared to its peers. This could make Harbour Energy PLC (ADR)’s stock more attractive for value investors.

Harbour Energy PLC (ADR)’s price-earnings ratio is 94.11 compared to the industry median at 9.16. This means it has a higher share price relative to earnings compared to its peers. This could make Harbour Energy PLC (ADR) less attractive for value investors.

Now, let’s assess Harbour Energy PLC (ADR)’s EV/EBITDA ratio, also known as enterprise multiple. At 1.6, 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. Harbour Energy PLC (ADR)’s shareholder yield is higher than its industry median ratio of 1.84%. 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. Harbour Energy PLC (ADR)’s price-to-book ratio is higher than its industry median ratio of 1.44. This could make Harbour Energy PLC (ADR) less attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Harbour Energy PLC (ADR)’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Harbour Energy PLC (ADR)’s price-to-free-cash-flow ratio is lower than its industry median ratio of 8.40. This could make Harbour Energy PLC (ADR) more attractive because the lower P/FCF ratio indicates that Harbour Energy PLC (ADR) 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.

Highpeak Energy Inc’s Value Grade

Value Grade:

HighPeak Energy, Inc. is an independent crude oil and natural gas company. The Company is focused on the acquisition, development, exploration and exploitation of unconventional crude oil and natural gas reserves in the Midland Basin in West Texas. It focuses on brownfield the Midland Basin and specifically the Howard and Borden Counties area of the Midland Basin. Its assets include certain rights, title and interests in crude oil and natural gas assets located primarily in Howard and Borden Counties, Texas, and to a lesser extent, Scurry and Mitchell Counties, Texas. Its assets are located in the northeastern part of the Midland Basin. The Midland Basin is part of the Permian Basin of West Texas and Eastern New Mexico. The Permian Basin covers an area of about 96,000 square miles and is comprised of five sub-regions including the Midland Basin, the Central Basin Platform, the Delaware Basin, the Northwest Shelf and the Eastern Shelf.

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 75, which is considered to be undervalued.

Highpeak Energy Inc’s price-earnings ratio is 9.8 compared to the industry median at 9.2. 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 1.44.

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.

PHX Minerals Inc’s Value Grade

Value Grade:

PHX Minerals Inc. is focused on perpetual natural gas and oil mineral ownership in resource plays in the United States. The Company owns interests in leasehold acreage and non-operated working interests in natural gas and oil properties. Its principal properties consisted of perpetual ownership of 240,651 net mineral acres, held principally in Oklahoma, Texas, Louisiana, North Dakota and Arkansas; leases on 13,293 net acres primarily in Oklahoma, and working interests, royalty interests or both in 6,773 producing natural gas and oil wells and 168 wells in the process of being drilled or completed. Exploration and development of its natural gas and oil properties are conducted by natural gas and oil exploration and production companies. The natural gas and oil producing activities of the Company conducts in Oklahoma, Texas, Louisiana, Arkansas and North Dakota.

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.

PHX Minerals Inc has a Value Score of 77, which is considered to be undervalued.

PHX Minerals Inc’s price-earnings ratio is 8.8 compared to the industry median at 9.2. This means that it has a lower price relative to its earnings compared to its peers. This makes PHX Minerals Inc more attractive for value investors.

PHX Minerals Inc’s price-to-book ratio is higher than its peers. This could make PHX Minerals Inc less attractive for value investors when compared to the industry median at 1.44.

You can read more about PHX Minerals 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 3 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.

• Harbour Energy PLC (ADR) stock has a Value Grade of B.
• Highpeak Energy Inc stock has a Value Grade of B.
• PHX Minerals Inc stock has a Value Grade of B.

Now that you have a bit more background about each of the 3 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.

• 3 Undervalued Oil & Gas - Exploration and Production Stocks for Monday, April 29
• Which Is a Better Investment, Antero Resources Corp or Chevron Corp Stock?
• Which Is a Better Investment, Antero Resources Corp or ConocoPhillips Stock?
• Which Is a Better Investment, Antero Resources Corp or Coterra Energy Inc Stock?

AAII Disclaimer

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