In this article, we will be looking at the ten cheap oil stocks under $10. If you want to skip our industry experience and skip to the top five stocks on this list, take a look at 5 Cheap Oil Stocks Under $10.
OPEC+’s decision to cut production in order to keep oil prices up created controversy earlier this month when the decision was sharply criticized by Washington. Oil prices have hit record highs this year following the Russian invasion of Ukraine, and if there’s one thing analysts can agree on, it’s that the world needs more oil.
The journey of a barrel of oil from its underground and underwater reserves to the final consumer is filled with many stages, such as analysis, exploration, production, refining and transportation. All of these segments are served by countless companies, and research covering the industry as a whole and by segment has optimistic growth estimates.
For instance, The Business Research Company estimates that the crude oil market was worth $1.35 trillion last year and will grow 4.2% this year to reach $1.41 trillion by the end of the year. Between now and 2025, growth will slow to a compound annual growth rate of 1%, with the market worth $1.47 trillion by the end of the forecast period. He links this growth to increased demand from China and India and points out that new technologies such as drill bits, pumps and high-performance imaging equipment make the work of exploration companies and production much easier than before.
Appreciate the reports focuses on the oil and gas analysis market. He believes that this sector, which focuses on using natural language processing to assess the regulatory environment, predictive analytics to determine when equipment might fail and uses simulations to monitor platforms, was worth $13 billion in 2020. By 2027, it will grow at a solid CAGR of 20.1% and be worth $48 billion by the end of the forecast period.
Today’s article looks at some cheap oil stocks that are doing well and have long-term growth potential, and the top performers on our list are Kosmos Energy Ltd. (NYSE:KOS), Transocean Ltd. (NYSE:PLATFORM), and Equitrans Midstream Corporation (NYSE:TEN).
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Our Methodology
We looked at the oil industry as a whole and then identified its various segments to sift through the companies that operate in each sector. The companies were then briefly analyzed based on their financials and market performance, after which they were ranked in Insider Monkey’s Q2 2022 survey of 895 hedge funds. These stocks are trading under $10 as of October 25.
10 Cheap Oil Stocks Under $10
10. Aemetis, Inc. (NASDAQ:AMTX)
Number of hedge fund holders: 5
Aemetis, Inc. (NASDAQ: AMTX) is an ethanol, biodiesel and biogas company headquartered in Cupertino, California, United States. The company sells its products to retailers, distributors and petroleum refining companies and serves markets in the United States and India.
Aemetis, Inc. (NASDAQ:AMTX) scored a big win in September 2022 when it announced it had secured $7 billion in airline fuel supply contracts. Airlines include some of the largest in the world, such as Cathay Pacific, British Airways, Delta Airlines and American Airlines. The contract with Cathay Pacific itself is worth $3 billion, and the full deal will see the company supply 916 million gallons of fuel.
Aemetis, Inc.’s (NASDAQ:AMTX) second quarter results saw the company post $66 million in revenue for 20% annual growth. Of the 895 hedge funds in Insider Monkey’s Q2 2022 survey, five had a stake in the company.
The largest investor in Aemetis, Inc. (NASDAQ:AMTX) is Todd J. Cantor’s Encompass Capital Advisors who owns 1.8 million shares worth $9 million.
Aemetis, Inc. (NASDAQ:AMTX) joins our list of cheap oil stocks, alongside Transocean Ltd. (NYSE:RIG), Kosmos Energy Ltd. (NYSE:KOS) and Equitrans Midstream Corporation (NYSE:ETRN).
9. Ring Energy, Inc. (NYSE:REI)
Number of hedge fund holders: 9
Ring Energy, Inc. (NYSE: REI) is an oil and gas company headquartered in The Woodlands, Texas. The company has nearly 80 million barrels of oil-equivalent reserves, and it has leases on tens of thousands of acres of oilfields across the United States.
Ring Energy, Inc. (NYSE:REI) is expected to generate $127 million in free cash flow by the end of 2023, and by reducing capital spending for the fourth quarter, the company is also able to reduce its net debt at $440. million by the end of 2022. If the price of WTI oil were to remain at $78, the company’s revenue for 2023 would sit at a respectable $440 million, which is also equal to its net debt reading.
Ring Energy, Inc. (NYSE:REI) also aims to sell up to 19,000 barrels of oil equivalent per day in the current quarter, and increase slightly next year. As part of their Q2 2022 holdings, nine of the 895 hedge fund portfolios scanned by Insider Monkey had invested in the company.
The largest investor in Ring Energy, Inc. (NYSE: REI) is John Overdeck and David Siegel’s Two Sigma Consultants who owns 1.6 million shares worth $4.3 million.
8. Independence Contract Drilling, Inc. (NYSE:CIM)
Number of hedge fund holders: 10
Independence Contract Drilling, Inc. (NYSE: ICD) is a contract drilling company that provides its services to other companies for oil and gas drilling. The company has multiple platforms and is headquartered in Houston, Texas, USA.
Independence Contract Drilling, Inc. (NYSE:ICD) is on an expansion path and the company aims to add eight more rigs to its portfolio by the end of 2023. It is also focused on improving of its operational efficiency and saw revenue per day increase by 5% between the first and second quarters of this year. Additionally, not only does Independence Contract Drilling, Inc. (NYSE:ICD) have a strong backlog, but 36% of its backlog is pegged at a rate of $32,000 per day for next year, which is already higher than current rates.
Independence Contract Drilling, Inc.’s (NYSE:ICD) enterprise value to free cash flow ratio of 1.23 makes it the least expensive company in its peer group. By the end of the second quarter of this year, ten of 895 hedge funds surveyed by Insider Monkey had invested in the company.
Among them, Marc Lisker, Glenn Fuhrman and John Phelan’s MSDC management is the largest investor in Independence Contract Drilling, Inc. (NYSE: ICD). She owns 1.6 million shares worth $5.2 million.
7. VAALCO Energy, Inc. (NYSE:EGY)
Number of hedge fund holders: 10
VAALCO Energy, Inc. (NYSE:EGY) explores, develops and produces crude oil and natural gas. The Company’s facilities are located in the West African regions of Equatorial Guinea and Gabon. He is based in Houston, Texas, USA.
VAALCO Energy, Inc. (NYSE:EGY) has one of the strongest balance sheets in the industry, with current and covered ratios of 892 and 0.95. These two metrics measure a company’s ability to repay its obligations and both show that the company is on solid footing. The company’s price-to-earnings ratio of 3.49 also makes it one of the cheapest in its peer group.
VAALCO Energy, Inc.’s (NYSE:EGY) low P/E ratio comes despite the company’s stock having appreciated 63% year-to-date. To make it an attractive cheap oil stock, VAALCO Energy, Inc. (NYSE:EGY) also pays a dividend of 3 cents for a yield of 2.36%. Insider Monkey’s June 2022 quarter survey found that ten of 895 hedge funds held a stake in the company.
The largest investor in VAALCO Energy, Inc. (NYSE:EGY) is Jim Simons Renaissance Technologies who owns 1.4 million shares worth $9.8 million.
6. National Energy Services Reunited Corp. (NASDAQ:RENS)
Number of hedge fund holders: 14
National Energy Services Reunited Corp. (NASDAQ:NESR) is a petroleum services provider that enables companies to cement their wells, perform splits, operate drilling systems, and test the output of their wells. The company is headquartered in Houston, Texas, USA.
National Energy Services Reunited Corp. (NASDAQ:NESR) is expanding its portfolio and industry presence, as the company announced in July this year that it will acquire the minority stakes, with the option to convert at majority, in a charting company of oil fields. The company also expanded its manufacturing footprint in the United Arab Emirates earlier this year, in the form of a five-year, $169 million contract. The deal is part of the UAE’s efforts to produce 5 million barrels of oil per day by 2030.
The latest victory for National Energy Services Reunited Corp. (NASDAQ:NESR) in 2022, however, came in September 2022, when the company was awarded a long-term contract for directional drilling in Saudi Arabia. Insider Monkey’s Q2 2022 survey of 895 hedge funds found 14 had bought the company’s stock.
Among these, Todd J. Kantor’s Encompass Capital Advisors is the largest investor in National Energy Services Reunited Corp. (NASDAQ:NESR). She owns 3.5 million shares worth $24 million.
(NYSE:KOS), Transocean Ltd. (NYSE:RIG) and Equitrans Midstream Corporation (NYSE:ETRN) are met by National Energy Services Reunited Corp. (NASDAQ:NESR) in our list of cheap oil stocks priced under $10.
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Disclosure: none. 10 Cheap Oil Stocks Under $10 is originally published on Insider Monkey.
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