3 Energy Stocks With Cheap Valuations and Big Returns Ahead

Key Points

• Amid recession fears, Exxon Mobil, Chevron and EOG Resources present potential value plays with strong dividend yields and institutional interest.
• Exxon Mobil's projected upside is 13.59% despite earnings misses, while Chevron’s dividend yield has climbed above 4%, with a forecasted upside of 9.73%.
• With a 17.7% expected price appreciation, strong earnings beats and a commitment to returning 70% of free cash flow to shareholders, EOG stands out as both a growth and income-generating play.

From tariffs to cuts in government spending, American markets are facing significant uncertainty, and some investors fear a recession could be on the horizon. While the future outlook remains uncertain, some investors are taking current dips in pricing as an opportunity to add sometimes volatile energy stocks to their portfolios. 

The energy sector is highly volatile, but some winners are experiencing price dips that suggest a temporary overcorrection. These stocks now trade at P/E ratios below 20, making them worth considering for an income-focused portfolio amid strong demand and limited supply in 2025.

Analysts Predict Over 13% Upside for Exxon Mobil 

Exxon Mobil NYSE: XOM missed its most recent earnings estimate by $0.10 per share, yet analysts still project a 13.59% upside.

The company’s low 14.51 P/E ratio comes after a series of institutional sales in the fourth quarter of 2024 from firms like Pitti Group Wealth Management and Easton Financial Holdings Company. 

Despite these reductions, Exxon Mobil’s financial statements indicate that the company’s promise of $20 billion in earnings growth by 2030 may be possible.

After hiring outside managers to assuage investors' concerns about spending, shares have already increased in price by 4.35% since the conclusion of Q4.

Considering the 14.51 P/E ratio and a 3.48% dividend yield, the stock may present a buying opportunity. 

Chevron Sees Dividend Yield Rise to More Than 4%

Another stock seeing increased institutional buying activity, Chevron NYSE: CVX, has already enjoyed a steady climb in share prices this year, rising 8.46% since the conclusion of 2024. This rise in pricing hasn’t raised the company’s P/E ratio outside of value stock territory, with Chevron currently displaying a P/E ratio of 16.33. 

Analysts expect more to come from Chevron in the next year, with a 9.73% potential upside. In addition to carrying a Moderate Buy consensus rating, investment experts seem optimistic about earnings, anticipating earnings growth of more than 16% within the next year. 

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When considering long-term holding potential, Chevron’s generous dividend and solid dividend growth over time are both features that make it an appealing choice. This energy stock currently features a dividend yield rate of 4.31%. Chevron has also focused a large percentage of its free cash flow to dividend increases, with a 38-year history of raising payouts and a 7.08% annualized three-year growth rate. 

Sub-10 P/E Ratio and Earnings Overachievement Could Push EOG Higher

As EOG Resources NYSE: EOG ramps up completion activity by 20% in plays like the Dorado and Utica, analysts expect share prices to push even higher in 2025 and beyond. EOG maintains the highest analyst upside on our list, with an anticipated upside of 17.70% and a Moderate Buy consensus rating. 

Part of this analyst confidence could come from its most recent earnings release, which revealed an EPS of $2.74 that beat expectations by $0.19 per share. EOG's decentralized model puts it in an advantageous position for future growth, with drilling advancements and data collection techniques exciting analysts for developing market activity. Experts are anticipating a modest EPS growth of 0.61% in the next year, indicating subdued positive sentiment. 

Despite EPS growth, EOG still maintains a rock-bottom P/E ratio of 9.95. Cash operating costs of $10.15 on a barrel of oil equivalent basis beat analyst estimates, and experts predict that future price appreciation may be found drilling "double premium" locations, which the company expects will return a 60% wellhead internal rate of return. 

Finally, EOG may be a strong defensive stock thanks to its commitment to dividend payments. The firm aims to return over 70% of its free cash flow to shareholders through dividends and share repurchases in addition to a series of special dividend payments made throughout the year. The company currently pays out a sustainable 24.21% of its cash flow as dividends, resulting in a 3.16% yield at current share prices.