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 Thursday, September 19, 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 an independent oil and gas company. It is engaged in the acquisition, exploration, development and production of oil and gas reserves on the United Kingdom and Norwegian Continental Shelves, Indonesia, Vietnam and Mexico. Its North Sea segment includes the United Kingdom and Norwegian continental shelves. Its International segment includes Indonesia, Vietnam and Mexico. Its UK offshore operating positions include the Greater Britannia Area, J-Area, AELE, Catcher Area and Tolmount Area. Its 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. It is also producing 475,000 barrels of oil equivalent per day with significant production in Norway, the United Kingdom, Argentina, North Africa and Germany.

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 88, which is considered to be undervalued.

When you look at Harbour Energy PLC (ADR)’s price-to-sales ratio at 0.75 compared to the industry median at 2.06, 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 28.37 compared to the industry median at 10.95. 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 1.5, when compared to the industry median of 5.1, 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 0.70%. 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 1.27. 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 6.83. 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.

Kolibri Global Energy Inc’s Value Grade

Value Grade:

Kolibri Global Energy Inc. is a North American energy company focused on finding and exploiting energy projects in oil and gas. The Company, through various subsidiaries, owns and operates energy properties in the United States. The Company utilizes its technical and operational expertise to identify and acquire additional projects in oil, gas and clean and sustainable energy. The Company develops its Caney Shale oil acreage in the Tishomingo Field in the Ardmore Basin, Oklahoma, United States. It has working interests in approximately 17,169 net acres in Ardmore Basin. Its Tishomingo Field activities produce oil, gas and natural gas liquids. Its proved gross oil and gas reserves in the Tishomingo field are estimated at approximately 32.4 million barrels of oil equivalent (BOE), the proved plus probable gross reserves are estimated at approximately 54.1 million BOE and the proved plus probable plus possible gross reserves are estimated at approximately 79.4 million BOE.

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.

Kolibri Global Energy Inc has a Value Score of 91, which is considered to be undervalued.

Kolibri Global Energy Inc’s price-earnings ratio is 6.0 compared to the industry median at 11.0. This means that it has a lower price relative to its earnings compared to its peers. This makes Kolibri Global Energy Inc more attractive for value investors.

Kolibri Global Energy Inc’s price-to-book ratio is higher than its peers. This could make Kolibri Global Energy Inc less attractive for value investors when compared to the industry median at 1.27.

You can read more about Kolibri Global 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.

Kosmos Energy Ltd’s Value Grade

Value Grade:

Kosmos Energy Ltd. is a full cycle, deepwater, independent oil and gas exploration and production company focused along the offshore Atlantic Margins. Its key assets include production offshore Ghana, Equatorial Guinea and the United States Gulf of Mexico, as well as gas projects offshore Mauritania and Senegal. The Company has operations in four geographic reporting segments: Ghana, Equatorial Guinea, Mauritania/Senegal and the U.S. Gulf of Mexico. The West Cape Three Points and Deepwater Tano Blocks are located within the Tano Basin, offshore Ghana. This basin contains a petroleum system. The EG-01, EG-21, EG-24 and S blocks are located in the southern part of the Gulf of Guinea, in the Republic of Equatorial Guinea, west of the Rio Muni petroleum province. It covers approximately 7,500 square kilometers, and it has over 6,400 square kilometers of 3D seismic over the blocks. The C8 and BirAllah blocks are located on the western margin of the Mauritania Salt Basin offshore Mauritania.

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.

Kosmos Energy Ltd has a Value Score of 73, which is considered to be undervalued.

Kosmos Energy Ltd’s price-earnings ratio is 8.0 compared to the industry median at 11.0. This means that it has a lower price relative to its earnings compared to its peers. This makes Kosmos Energy Ltd more attractive for value investors.

Kosmos Energy Ltd’s price-to-book ratio is lower than its peers. This could make Kosmos Energy Ltd more attractive for value investors when compared to the industry median at 1.27.

You can read more about Kosmos Energy Ltd’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.

Magnolia Oil & Gas Corp’s Value Grade

Value Grade:

Magnolia Oil & Gas Corporation is an independent oil and natural gas company, which acquires, develops, explores and produces oil, natural gas and natural gas liquid (NGL) reserves. The Company’s oil and natural gas properties are located primarily in the Karnes and Giddings areas in South Texas, where the Company targets the Eagle Ford Shale and Austin Chalk formations. The Company’s assets consist of a total leasehold position of 789,719 gross (576,504 net) acres, including 72,503 gross (50,681 net) acres in the Karnes area and 717,216 gross (525,823 net) acres in the Giddings area. The Karnes area consists of oil and natural gas assets primarily located in Karnes, Dimmit, Gonzales, and Zavala Counties, Texas, in the core of the Eagle Ford Shale. The acreage comprising the Karnes area also includes the Austin Chalk formation overlying the Eagle Ford Shale. The Giddings Assets are located in Brazos, Burleson, Fayette, Grimes, Lee, Milam, Robertson and Washington Counties, Texas.

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.

Magnolia Oil & Gas Corp has a Value Score of 63, which is considered to be undervalued.

Magnolia Oil & Gas Corp’s price-earnings ratio is 12.3 compared to the industry median at 11.0. This means that it has a higher price relative to its earnings compared to its peers. This makes Magnolia Oil & Gas Corp less attractive for value investors.

Magnolia Oil & Gas Corp’s price-to-book ratio is lower than its peers. This could make Magnolia Oil & Gas Corp more attractive for value investors when compared to the industry median at 1.27.

You can read more about Magnolia Oil & Gas 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.

Obsidian Energy Ltd’s Value Grade

Value Grade:

Obsidian Energy Ltd. is a Canada-based exploration and production company. The Company operates in one segment, to explore for, develop and hold interests in oil and natural gas properties and related production infrastructure in the Western Canada Sedimentary Basin directly and through investments in securities of subsidiaries holding such interests. It has a portfolio of assets producing around 35,700 barrels of oil equivalent (boe) per day. Its operating areas include Cardium, Peace River and Viking areas of Alberta. Its Cardium asset is a fully delineated and de-risked asset. It is focused on manufacturing repeatable low-decline and high-netback light-oil wells across its Cardium land base. The Viking is a light oil, horizontal development play located in central Alberta. Its operations are focused on the Esther area. Peace River is a stable, cold-flow, base production asset. It operates on a contiguous and an acreage within the heart of the Peace River Oilsands region.

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.

Obsidian Energy Ltd has a Value Score of 99, which is considered to be undervalued.

Obsidian Energy Ltd’s price-earnings ratio is 6.0 compared to the industry median at 11.0. This means that it has a lower price relative to its earnings compared to its peers. This makes Obsidian Energy Ltd more attractive for value investors.

Obsidian Energy Ltd’s price-to-book ratio is higher than its peers. This could make Obsidian Energy Ltd less attractive for value investors when compared to the industry median at 1.27.

You can read more about Obsidian Energy Ltd’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.

• Harbour Energy PLC (ADR) stock has a Value Grade of A.
• Kolibri Global Energy Inc stock has a Value Grade of A.
• Kosmos Energy Ltd stock has a Value Grade of B.
• Magnolia Oil & Gas Corp stock has a Value Grade of B.
• Obsidian Energy Ltd stock has a Value Grade of A.

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 Thursday, September 19
• 5 Undervalued Oil & Gas - Exploration and Production Stocks for Wednesday, September 18
• 4 Undervalued Oil & Gas - Exploration and Production Stocks for Tuesday, September 17
• Why Highpeak Energy Inc’s (HPK) Stock Is Up 5.54%

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