Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 4 stocks made the list for top value stocks in the Oil, Gas & Consumable Fuels 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 & Consumable Fuels 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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4 Undervalued Oil, Gas & Consumable Fuels Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 4 undervalued stocks in the Oil, Gas & Consumable Fuels industry for Thursday, October 17, 2024. Let’s take a closer look at their individual scores to see how they measure up against each other and the Oil, Gas & Consumable Fuels 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.

Diversified Energy Company PLC’s Value Grade

Value Grade:

Diversified Energy Company PLC operates as an independent owner and operator of producing natural gas and oil wells primarily in the Appalachian Basin of the United States. The company is involved in the production, marketing, and transportation of natural gas, natural gas liquids, crude oil, and condensates. Its assets consist of natural gas wells and gathering systems located in the states of Tennessee, Kentucky, Virginia, West Virginia, Ohio, Pennsylvania, Oklahoma, Texas, and Louisiana. The company was formerly known as Diversified Gas & Oil PLC and changed its name to Diversified Energy Company PLC in May 2021. Diversified Energy Company PLC was founded in 2001 and is headquartered in Birmingham, Alabama.

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.

Diversified Energy Company PLC has a Value Score of 92, which is considered to be undervalued.

When you look at Diversified Energy Company PLC’s price-to-sales ratio at 0.78 compared to the industry median at 1.69, this company has a lower price relative to revenue compared to its peers. This could make Diversified Energy Company PLC’s stock more attractive for value investors.

Diversified Energy Company PLC’s price-earnings ratio is 3.90 compared to the industry median at 11.05. This means it has a lower share price relative to earnings compared to its peers. This could make Diversified Energy Company PLC more attractive for value investors.

Now, let’s assess Diversified Energy Company PLC’s EV/EBITDA ratio, also known as enterprise multiple. At 5.1, when compared to the industry median of 5.8, 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. Diversified Energy Company PLC’s shareholder yield is higher than its industry median ratio of 4.50%. 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. Diversified Energy Company PLC’s price-to-book ratio is lower than its industry median ratio of 1.36. This could make Diversified Energy Company PLC more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Diversified Energy Company PLC’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Diversified Energy Company PLC’s price-to-free-cash-flow ratio is higher than its industry median ratio of 14.10. This could make Diversified Energy Company PLC less attractive because the higher P/FCF ratio indicates that Diversified Energy Company PLC 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.

Delek US Holdings, Inc.’s Value Grade

Value Grade:

Delek US Holdings, Inc. engages in the integrated downstream energy business in the United States. The company operates through Refining, Logistics, and Retail segments. The Refining segment processes crude oil and other feedstock for the manufacture of various grades of gasoline, diesel fuel, aviation fuel, asphalt, and other petroleum-based products that are distributed through owned and third-party product terminal. It owns and operates refineries located in Tyler, Texas; El Dorado, Arkansas; Big Spring, Texas; and Krotz Springs, Louisiana, as well as biodiesel facilities in Crossett, Arkansas, Cleburne, Texas, and New Albany, Mississippi. The Logistics segment gathers, transports, and stores crude oil, intermediate, and refined products; and markets, distributes, transports, and stores refined products, as well as disposes and recycles water for third parties. It owns or leases crude oil transportation pipelines, refined product pipelines, crude oil gathering systems, and associated crude oil storage tanks; and owns and operates light product distribution terminals, as well as markets light products using third-party terminals. The Retail segment owns and leases convenience store sites located primarily in West Texas and New Mexico. Its convenience stores offer various grades of gasoline and diesel under the DK or Alon brand; and food products and service, tobacco products, non-alcoholic and alcoholic beverages, and general merchandise, as well as money orders to the public primarily under the 7-Eleven and DK or Alon brand names. It serves oil companies, independent refiners and marketers, jobbers, distributors, utility and transportation companies, government, and independent retail fuel operators. Delek US Holdings, Inc. was founded in 2001 and is headquartered in Brentwood, Tennessee.

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.

Delek US Holdings, Inc. has a Value Score of 98, which is considered to be undervalued.

Delek US Holdings, Inc.’s price-to-book ratio is higher than its peers. This could make Delek US Holdings, Inc. less attractive for value investors when compared to the industry median at 1.36.

You can read more about Delek US Holdings, 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.

Petróleo Brasileiro S.A. - Petrobras’s Value Grade

Value Grade:

Petróleo Brasileiro S.A. - Petrobras explores, produces, and sells oil and gas in Brazil and internationally. The company operates through three segments: Exploration and Production; Refining, Transportation and Marketing; and Gas and Power. The Exploration and Production segment explores, develops, and produces crude oil, natural gas liquids, and natural gas primarily for supplies to the domestic refineries. The Refining, Transportation and Marketing segment engages in the refining, logistics, transport, acquisition, and exports of crude oil; and production of fertilizers, as well as holding interests in petrochemical companies. The Gas and Power segment is involved in the logistic and trading of natural gas and electricity; transportation and trading of LNG; generation of electricity through thermoelectric power plants; renewable energy businesses; low carbon services; and natural gas processing business, as well as production of biodiesel and its co-products. The company also engages in prospecting, drilling, refining, processing, trading, and transporting crude oil from producing onshore and offshore oil fields, and shale or other rocks, as well as oil products, natural gas, and other liquid hydrocarbons. In addition, it engages in research, development, production, transport, distribution, and trading of energy. Petróleo Brasileiro S.A. - Petrobras was incorporated in 1953 and is headquartered in Rio de Janeiro, Brazil.

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.

Petróleo Brasileiro S.A. - Petrobras has a Value Score of 98, which is considered to be undervalued.

Petróleo Brasileiro S.A. - Petrobras’s price-earnings ratio is 13.2 compared to the industry median at 11.1. This means that it has a higher price relative to its earnings compared to its peers. This makes Petróleo Brasileiro S.A. - Petrobras less attractive for value investors.

Petróleo Brasileiro S.A. - Petrobras’s price-to-book ratio is higher than its peers. This could make Petróleo Brasileiro S.A. - Petrobras less attractive for value investors when compared to the industry median at 1.36.

You can read more about Petróleo Brasileiro S.A. - Petrobras’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.

Unit Corporation’s Value Grade

Value Grade:

Unit Corporation, together with its subsidiaries, engages in the exploration, acquisition, development, and production of oil and natural gas properties in the United States. The company operates through Oil and Natural Gas, Contract Drilling, and Mid-Stream segments. The Oil and Natural Gas segment explores for, acquires, develops, and produces oil and natural gas properties. Its producing oil and natural gas properties, unproved properties, and related assets are primarily located in Oklahoma and Texas, as well as in Kansas, and Louisiana. The Contract Drilling segment is involved in the drilling of onshore oil and natural gas wells for a range of other oil and natural gas companies primarily in Oklahoma, Texas, and New Mexico. The Mid-Stream segment buys, sells, gathers, processes, and treats natural gas for third parties. This segment operates natural gas treatment plants, processing plants, gathering systems, and pipeline in Oklahoma, Texas, Kansas, Pennsylvania, and West Virginia. Unit Corporation was incorporated in 1963 and is headquartered in Tulsa, Oklahoma.

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.

Unit Corporation has a Value Score of 84, which is considered to be undervalued.

Unit Corporation’s price-earnings ratio is 2.8 compared to the industry median at 11.1. This means that it has a lower price relative to its earnings compared to its peers. This makes Unit Corporation more attractive for value investors.

Unit Corporation’s price-to-book ratio is higher than its peers. This could make Unit Corporation less attractive for value investors when compared to the industry median at 1.36.

You can read more about Unit Corporation’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 & Consumable Fuels 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 & Consumable Fuels stocks as well as other industrys.

Choosing Which of the 4 Best Oil, Gas & Consumable Fuels 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.

• Diversified Energy Company PLC stock has a Value Grade of A.
• Delek US Holdings, Inc. stock has a Value Grade of A.
• Petróleo Brasileiro S.A. - Petrobras stock has a Value Grade of A.
• Unit Corporation stock has a Value Grade of A.

Now that you have a bit more background about each of the 4 undervalued stocks in the Oil, Gas & Consumable Fuels 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 & Consumable Fuels Stocks

Want to learn more about Oil, Gas & Consumable Fuels 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.

• 4 Undervalued Oil, Gas & Consumable Fuels Stocks for Thursday, October 17
• 5 Undervalued Oil, Gas & Consumable Fuels Stocks for Wednesday, October 16
• 4 Undervalued Oil, Gas & Consumable Fuels Stocks for Tuesday, October 15
• 7 Undervalued Oil, Gas & Consumable Fuels Stocks for Monday, October 14

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