Power Plays: 6 Undervalued Energy Stocks Analysts Say Look Attractive NowEnergy stocks are back in focus — and for good reason.
Over the past 12 months:
• The Morningstar US Energy Index gained 22.59%
• The broader Morningstar US Market Index rose 15.33%
Energy has outperformed the general market — and analysts believe several names are still undervalued.
Here’s what’s driving interest
Why Investors Like Energy Stocks
Energy stocks are attractive because they:
• Help diversify portfolios (often move differently from tech and financials)
• Offer strong dividend yields
• Provide exposure to rising oil & gas prices
• Act as inflation hedges
Now let’s look at the six energy stocks analysts consider undervalued.
️ The 6 Best Energy Stocks to Buy Now
Devon Energy (DVN)Industry: Oil & Gas Exploration & Production
Forward Yield: 2.21%
Undervaluation: Trading ~24% below fair value
Why it stands out:
• One of the lowest-cost shale producers
• Strong exposure to the Delaware Basin
• Fixed + variable dividend model
• Returns 60% of free cash flow to shareholders
Strategic restructuring over the past few years has significantly strengthened its cost position
EOG Resources (EOG)Industry: Oil & Gas E&P
Forward Yield: 3.62%
Undervaluation: ~19% below fair value
Why it stands out:
• Strong capital discipline
• Returns over 70% of free cash flow to shareholders
• Focuses on “double premium” drilling locations
• Avoids overpaying for acquisitions
EOG is seen as one of the most efficient operators in U.S. shale.
Energy Transfer (ET)Industry: Midstream (Pipelines & Infrastructure)
Forward Yield: 7.32%
Undervaluation: ~18% below fair value
Why it stands out:
• Major player in natural gas infrastructure
• Positioned to benefit from rising LNG demand
• Expanding pipelines and export capacity
• Exposure to data center-driven gas demand
This is more of a high-yield infrastructure play than a direct oil producer.
Diamondback Energy (FANG)Industry: Oil & Gas E&P
Forward Yield: 2.43%
Undervaluation: ~15% below fair value
Why it stands out:
• Pure-play Permian Basin operator
• Strong operational efficiency
• Returns 50% of free cash flow to shareholders
• Excellent cost control history
Diamondback has delivered total returns that significantly outpaced the broader market since IPO.
Cheniere Energy (LNG)Industry: LNG Export & Midstream
Forward Yield: 1.02%
Undervaluation: ~9% below fair value
Why it stands out:
• Wide economic moat
• Long-term contracts (20+ years)
• Expansion projects secured by contracts
• Strategic pivot to smaller, faster expansion projects
Cheniere benefits from global LNG demand growth, particularly in Europe and Asia.
ONEOK (OKE)Industry: Midstream
Forward Yield: 4.98%
Undervaluation: ~8% below fair value
Why it stands out:
• Strong natural gas & NGL infrastructure
• Strategic acquisitions (Magellan, EnLink, Medallion)
• Major pipeline expansion projects underway
• Exposure to LNG export growth and Mexico demand
ONEOK is seen as a steady midstream growth + income hybrid.
What This Means for Investors
Energy remains attractive because:
Cash returns to shareholders are strong Many companies are more disciplined than during the shale boom LNG demand is growing globally Natural gas infrastructure is expandingHowever, energy stocks are still cyclical — performance will depend heavily on:
• Oil prices
• Natural gas demand
• Global economic growth
• Geopolitical factors
InvestingPort Insight
Notice a pattern?
Most of these companies:
• Emphasize capital discipline
• Return large portions of free cash flow
• Operate in low-cost basins
• Focus on infrastructure tied to LNG growth
This is not the “growth at any cost” energy sector of 2012.
It’s a cash-return, capital-efficiency story.
