Deep Value for Devon Energy Investors

By Joel South and Taylor Muckerman – Jan 23, 2013 at 2:00PM

NYSE: DVN

Devon Energy

Market Cap

$33B

Today's Change

(-1.39%) -$0.74

Current Price

$52.68

Price as of April 15, 2024, 4:00 p.m. ET

The case for Devon Energy as a deep value stock.

In this video,energy analyst Joel South discusses Devon Energy (DVN -1.39%) and explains why it's among the cheapest energy investments available today. Joel believes the stock is trading at half its net asset value because of its heavy exposure to natural gas and current problems in takeaway capacity in the oil sands industry.

What makes Devon attractive is that it's a low-cost producer of natural gas, is improving its liquids growth, and sports one of the best balance sheets in its peer group. While it will take time for pipeline and rail capacity to grow and alleviate the transportation bottleneck in Canada, Devon's $7.5 billion in cash should help it get through this transition.

Devon is a "buy it and forget it" stock with significant capital gains potential as natural gas prices slowly rise and deliveries from oil sands increase with growing pipeline capacity.

Joel South has no position in any stocks mentioned. Taylor Muckerman has no position in any stocks mentioned. The Motley Fool recommends Kinder Morgan and Ultra Petroleum. The Motley Fool owns shares of Devon Energy, Kinder Morgan, and Ultra Petroleum and has the following options: Long Jan 2014 $30 Calls on Ultra Petroleum, Long Jan 2014 $40 Calls on Ultra Petroleum, Long Jan 2014 $50 Calls on Ultra Petroleum, and Short Jan 2014 $20 Puts on Ultra Petroleum. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.