This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
$1 buys you full access to ALL of TheStreet's Subscription Services! Learn More

Check out these 3 undervalued energy stocks trading on the S&P 500

Stocks in this article: APAMURRDC

James Dennin, Kapitall: S&P basic materials companies have outperformed this year, so we looked for undervalued energy stocks. 

The top performers on this year's stock market so far have been stocks that investors usually avoid.

Traditional oil and energy companies, heavily shorted stocks, and companies avoided by money managers are leading gains in the S&P 500. Energy stocks with low multiples have gained more than 7% this year. 

At the same time, growth plays in tech companies like Netflix (NFLX) and Amazon (AMZN) – last year's most popular investments – have fallen 20% or more. 

There are a few possible explanations for this. When valuations are a concern, other stock market plays like shorting will become more attractive. And dividend stocks that pay out profits to consumers rather than invest them in growing the company are usually seen as more stable investments. 

With that in mind we decided to run a screen on energy stocks in case the trend continues. 

We started with a universe of about 80 stocks that trade on the S&P 500 and which also operate in basic materials: mining, oil and gas, or specialty chemicals. Since this sector has been the most popular, we looked for plays that might, for some reason, have been missed by the market.

Read more from Kapitall: Check out these 6 dividend champions with growing profits 

To do that we screened for companies that are trading at least 20% below their Graham Number. Named for pioneer value investor Benjamin Graham, the Graham Number is an approximate "fair value" for the stock based on earnings and book value. 

When a number trades well below its Graham Number, it might be said to be undervalued. This screen left us with 3 companies on our list. Check out the companies below and let us know what you think in the comments.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,827.75 +12.81 0.07%
S&P 500 2,072.83 +5.80 0.28%
NASDAQ 4,787.3170 +29.0650 0.61%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs