Best Undervalued Energy Stocks in June

Energy companies, such as ECA Marcellus Trust I, trading at a market price below their true values are considered to be undervalued. There’s a few ways you can value a company. The most popular methods include discounting the company’s cash flows it is expected to create in the future, or comparing its price to its peers or the value of its assets. Analysing the most recent financial data, I’ve created a list of companies that compare favourably in all criteria, making them potentially good investments.

ECA Marcellus Trust I (NYSE:ECT)

ECA Marcellus Trust I owns royalty interests in producing and development horizontal natural gas wells for Energy Corporation of America (ECA). ECA Marcellus Trust I was formed in 2010 and with the company’s market cap sitting at USD $34.33M, it falls under the small-cap category.

ECT’s stock is currently floating at around -57% beneath its true value of $4.52, at a price tag of US$1.95, according to my discounted cash flow model. This mismatch signals an opportunity to buy ECT shares at a discount. In addition to this, ECT’s PE ratio is trading at around 6.53x against its its Oil and Gas peer level of, 13.42x suggesting that relative to its peers, ECT can be bought at a cheaper price right now. ECT is also a financially healthy company, with short-term assets covering liabilities in the near future as well as in the long run. ECT has zero debt on its books as well, meaning it has no long term debt obligations to worry about. Dig deeper into ECA Marcellus Trust I here.

NYSE:ECT PE PEG Gauge Jun 26th 18
NYSE:ECT PE PEG Gauge Jun 26th 18

San Juan Basin Royalty Trust (NYSE:SJT)

San Juan Basin Royalty Trust operates as an express trust in Texas. San Juan Basin Royalty Trust was started in 1980 and with the company’s market cap sitting at USD $280.12M, it falls under the small-cap stocks category.

SJT’s stock is currently trading at -40% below its actual level of $10.04, at a price tag of US$6.01, according to my discounted cash flow model. The mismatch signals a potential chance to invest in SJT at a discounted price. What’s even more appeal is that SJT’s PE ratio stands at around 7.53x relative to its Oil and Gas peer level of, 13.42x implying that relative to its peers, we can invest in SJT at a lower price. SJT also has a healthy balance sheet, with near-term assets able to cover upcoming and long-term liabilities. SJT has zero debt on its books as well, meaning it has no long term debt obligations to worry about. Dig deeper into San Juan Basin Royalty Trust here.

NYSE:SJT PE PEG Gauge Jun 26th 18
NYSE:SJT PE PEG Gauge Jun 26th 18

Natural Resource Partners L.P. (NYSE:NRP)

Natural Resource Partners L.P., through its subsidiaries, owns, operates, manages, and leases mineral properties in the United States. Started in 2002, and run by CEO Corbin Robertson, the company currently employs 243 people and with the company’s market cap sitting at USD $394.32M, it falls under the small-cap group.

NRP’s stock is currently floating at around -26% beneath its actual value of $43.75, at the market price of US$32.20, based on my discounted cash flow model. The difference between value and price signals a potential opportunity to buy NRP shares at a discount. Furthermore, NRP’s PE ratio stands at 5.11x against its its Oil and Gas peer level of, 13.42x meaning that relative to its peers, NRP can be bought at a cheaper price right now. NRP is also in good financial health, with short-term assets covering liabilities in the near future as well as in the long run. The stock’s debt-to-equity ratio of 152.14% has been declining over the past couple of years revealing its ability to reduce its debt obligations year on year. Dig deeper into Natural Resource Partners here.

NYSE:NRP PE PEG Gauge Jun 26th 18
NYSE:NRP PE PEG Gauge Jun 26th 18

For more financially sound, undervalued companies to add to your portfolio, explore this interactive list of undervalued stocks.