In search of 'undervalued value': Mizuho names stocks that have yet to recover from oil's rise
One of Japan's largest banks advised betting on relatively small oil producers
Devon Energy is an independent oil and gas company and one of the leading players in the US shale oil market / Photo: 4kclips / Shutterstock.com
Quotes of oil majors have already rebounded from the rally in the energy market, adding about a third since the beginning of 2026. While the shares of major players are trading near the highs, financial giant Mizuho suggested investors to pay attention to the securities of independent oil producers. They are lagging behind the market and have not yet exhausted their growth potential.
Details
With Exxon Mobil, Chevron and ConocoPhillips shares sharply up in price because of the war in Iran, investors should look for "undervalued value" in the oil sector, Barron's reports, citing Mizuho analyst Nitin Kumar. His top favorites are Devon Energy, Diamondback Energy and Permian Resources - mid-sized oil producers whose securities are relatively cheap right now. The analyst also named Occidental Petroleum, Ovintiv and California Resources as investment alternatives worth mentioning.
Investment recommendations are based on the updated macro forecast: the Iranian crisis forced Mizuho to reconsider the prospects of the oil market. According to his calculations, the quotations will remain high in the first quarter, but in the summer may go down sharply, dropping to the neighborhood of $75 per barrel and less "as the situation is defused". By the end of 2026, prices will fix at equilibrium levels of $75 per barrel for Brent and $70 for WTI, Kumar said. Against the background of low inventories and demand for replenishment of oil reserves, the return of quotations to these marks will occur "about six months earlier than pre-war expectations," the economist added.
What's happening to oil prices
On March 18, Brent futures fell by 1.2% to $102 per barrel, while WTI contracts lost 2.7% and fell below $94. Quotes of benchmark grades lost the growth of the previous trading session after Iraq agreed to resume oil exports through the Turkish port of Ceyhan - this eased market fears of supply disruptions amid the war in Iran. At the same time, the U.S. stepped up efforts to unblock the Strait of Hormuz, although allied countries have so far rejected calls from President Donald Trump to help secure shipping in the area. Iran has guaranteed safe transit selectively, depending on whose flag the ships fly and to whom they belong, according to Trading Economics.
What Wall Street thinks about stocks
FactSet's consensus outlook is generally positive on Wall Street's view of Mizuho's favorites, with Diamondback Energy and Permian Resources ' shares rated Buy and Devon Energy's securities rated Overweight (equivalent to a buy recommendation), with upside potential ranging from 5% to 12%.
Alternative investments from Mizuho list also enjoy Wall Street's support - analysts on average assess the prospects of Ovintiv and California Resources as "above market" (Overweight), predicting the growth of shares by 8-12% to the current levels. Occidental is the exception: neutral recommendation "Hold" (Hold) prevails on these securities, and their quotations ($57.73) have already exceeded the average estimate of experts ($55.56).
This article was AI-translated and verified by a human editor
