BOSTON ( TheStreet) -- World oil prices are down by about 20% from the first quarter's $100 a barrel crude, hurt by the European sovereign debt debacle, the depressed economies of the U.S. and China, and a huge domestic supply of natural gas and a rising supply of oil from the Middle East.And investors took that to mean there's not much profit to be had in the energy sector, as selling pushed share prices down 5.3% this year for the group, versus the benchmark S&P 500's 6.8% gain. As a result of the sell-off, some of the energy industry's best companies' shares are in the bargain bin and trading at prices far below reasonable valuations. But the sharp declines many of these companies have seen defy logic, at least from a long-term investment perspective, as they are positioned to take ongoing advantage of what is surely a long-term trend -- oil and natural gas generated and consumed in North America. One prime example of the market giving up on quality is the exploration and production giant Apache ( APA), which is selling at a forward price-to-earnings ratio of 6.8, or just under half that of the S&P 500's 12.9 P/E. This at a time when analysts are giving Apache shares 20 "buy" recommendations and six "buy/holds," while Standard & Poor's has a price target on its shares that is a 65% premium to its current price. Yes, there's oversupply in many energy commodity sectors in the U.S. today, especially of coal and natural gas. But a long, hot summer could knock that down significantly as air conditioner use skyrockets. And longer term, domestic demand for North American shale oil products and natural gas is assured as big consumers such as utlities switch over to them. Standard & Poor's analysts wrote in May that "despite the recent pullback in (exploration and production) equities, we are positive on the fundamentals of the group and think valuations are inexpensive relative to historical ranges." It said that the industry's earnings per share grew about 27% in 2011, and although it's expected to slip 3% in 2012 on lower oil and gas prices due to the current big supply and because increased production from onshore shale plays have pressured spot prices, "we think the group is generating strong production growth, especially onshore U.S., which will help drive cash flow growth over the next several years." Similarly, oil transport and storage, which includes companies that own pipelines and tank farms, have seen their earnings hurt by lower oil and gas prices in the near term, long term they are in a sweet spot given that they own or control unique infrastructures that are virtually impossible to duplicate and that can only bode well for long-term earnings and cash flow. Here are seven highly rated North American-focused energy stocks with excellent long-term prospects ranked in inverse order of the number of analysts' "buy" ratings:
7. Kinder Morgan Energy Partners ( KMP) Company profile: Kinder Morgan, with a market value of $26 billion, is one of the nation's largest pipeline master limited partnerships after its $38 billion acquisition of pipeline giant El Paso Corp. in May. Dividend Yield: 6.34% Investor takeaway: Its shares are down 6.4% this year, but have a three-year, average annual return of 21.5%. Analysts give its shares three "buy" ratings, 11 "holds," and one "sell," according to a survey of analysts by S&P. But S&P has it rated "strong buy" with a $99 price target, which is a 32% premium to the current price. It says that the El Paso deal will be a long-term positive for growth and cash flow, as does Morningstar. Kinder Morgan has a forward P/E of 25.1. 6. Ultra Petroleum ( UPL) Company profile: Ultra, with a market value of $3 billion, is an independent exploration and production company with natural gas reserves in Wyoming and Pennsylvania. Investor takeaway: Its shares are down 24% this year, but up 20% in the past month. Analysts give its shares five "buy" ratings, one "buy/hold," and 19 "holds," according to a survey of analysts by S&P. Morningstar analyst Jason Stevens is upbeat on the company, giving it a five-star rating, his firm's highest, and says: "The firm's sizable inventory and industry-leading cost structure should support a decade or more of profitable growth, even in the face of continued low gas prices. A takeout offer from one of the majors or a larger independent could also help fast-track value realization." But S&P has it rated "hold," saying that "oversupplied gas markets have led UPL to sharply reduce activity and operating targets in 2012." The company has a forward P/E of 23.5. 5. Suncor Energy ( SU) Company profile: Suncor Energy, with a market value of $43 billion, is an integrated oil and gas company and one of the largest energy companies in Canada after its August 2009 merger with Petro-Canada. Its production is focused on Alberta's Athabasca oil sands, with complementary operations in refining and marketing. Its retail service station network operates in Canada under the Petro-Canada brand. Dividend Yield: 1.84% Investor takeaway: Its shares are down 27% this year, including 15.5% in the past three months. Analysts' ratings are bullish as they give its shares six "buy" ratings, 11 "buy/holds," and four "holds," according to a survey of analysts by S&P. Analysts' consensus estimate is for earnings of $3.32 per share this year and growth of 11% to $3.70 next year. S&P has it rated "hold," but has a 12-month $38 price target on the shares, which is a 38% premium to the current price. It has a forward P/E of 7.2. 4. Devon Energy ( DVN) Company profile: Devon, with a market value of $23 billion, is a diversified exploration and production company (oil and, increasingly, natural gas). About 60% of its production volume comes from natural gas, which could stifle profit growth if such end market prices remain low long-term due to a surplus. Dividend Yield: 1.41% Investor takeaway: Its shares are down 7.7% this year and 20% over the past three months. Analysts give its shares 12 "buy" ratings, nine "buy/holds," and eight "holds," according to a survey of analysts by S&P. S&P rates its shares "buy," with a 44% premium on the current price to S&P's 12-month target price. Morningstar gives it its highest rating of five stars and its analyst Mark Hanson says that, "since late 2009, Devon has closed on almost $10 billion in asset sales as part of its shift toward U.S. and Canadian onshore resource plays. The result is a broad portfolio of growth-oriented oil and gas assets and a rock-solid balance sheet to aggressively develop these resources over the next several years." The company has a forward P/E of 7.8.
3. Enterprise Products Partners ( EPD) Company profile: Enterprise, a partnership with a market value of $43 billion, is an integrated provider of natural gas and natural gas liquids services, including processing, transportation and storage. Dividend Yield: 5.20% Investor takeaway: Its shares are up 11% this year and have a three-year, average annual return of 31%. Analysts give its shares 13 "buy" ratings, eight "buy/holds," and one "hold," according to a survey of analysts by S&P. S&P has it rated "strong buy" with a $59 price target, which is a 23% premium to the current price. The ratings firm says it "is well-positioned to benefit from its strategically located assets, diverse cash flows, and solid balance sheet. It has a strong asset base, in our view, with access to high-demand markets and major supply sources" and adds that "we expect rising pipeline volumes to boost earnings and cash flow over the next several years." Enterprise Products Partners has a forward P/E of 18.4. 2. Pioneer Natural Resources ( PXD) Company profile: Pioneer, with a market value of $10 billion, explores for and produces oil and natural gas in the U.S. Dividend Yield: 0.10% Investor takeaway: Its shares are down 7 % this year, including 21% this year. Analysts give its shares 16 "buy" ratings, six "buy/holds," and eight "holds," according to a survey of analysts by S&P. S&P has it rated "strong buy" with a $135 price target, a 63% premium to its current price. S&P says "a higher liquids mix," meaning a shift to producing more oil and natural gas liquids, should help boost earnings growth to $5.78 per share in 2012 and $8.85 in 2013, up from $3.95 per share last year. Pioneer Natural Resources has a forward P/E of 10.9. 1. Apache ( APA) Company profile: Apache, with a market value of $33 billion, is one of the largest independent exploration and production companies in the U.S. It explores for, develops and produces natural gas, crude oil and natural gas liquids. An international company, in North America, its interests is focused on the Gulf of Mexico, the Gulf Coast, and Permian and Central regions of the U.S. and Canada thanks to several recent acquisitions. Apache has gone on an acquisition binge recently, spending more than $18 billion over the past several quarters and has greatly diversified its product mix of oil and gas and where they are produced, which should serve to mitigate market price swings in any one particular product. Dividend Yield: 0.7% Investor takeaway: Its shares are down 5.5% this year, including 14% in the past three months. Analysts give its shares 20 "buy" ratings, six "buy/holds," and seven "holds," according to a survey of analysts by S&P. S&P has it rated "strong buy" with a $136 price target, a 65% premium to its current price, and that's after knocking down the target price from $145 in May. Apache has a forward P/E of 6.8.