Since oil hit the lows of $26.21 a barrel in January of 2016, the price has rebounded sharply, and recently a barrel of West Texas Intermediate reached almost $74 in June. Given that oil has rallied almost 200%, one would think that the prices of energy companies would do the same. While many are off their lows from two and three years ago, a new Baird research report makes the case that many of the top companies are trading at a discount:

The stocks are trading at 80% of current net asset value of NAV using NYMEX prices. The 2018 WTI/Henry Hub average prices, including futures, are $66.42/$2.92, respectively. The 2023 futures (the basis of our long-term NAV price assumptions) are $55.25/$2.68. Over at least the past 10 years, the exploration and production group has tended to trade close to NYMEX NAV. The median stock on our coverage list has 36% potential upside to its 12-month price target.

Baird covers these four large-cap exploration and production stocks, and all four are rated Outperform. Their stocks make sense for growth accounts looking to add energy exposure.

Cimarex Energy

This is a top play for investors looking to the Permian Basin. Cimarex Energy Co. (NYSE: XEC) is an independent exploration and production company. Its primary activities are in the Mid-Continent and Permian Basin areas of the United States.

The company is focused on increasing shareholder value through strategies linked to generating attractive economic returns on capital employed and profitable growth in per-share reserves, production and cash flow. It intends to profitably grow reserves and production through a balanced mix of exploration, exploitation and acquisitions.

Cimarex has a diversified base of high-quality production and attractive drilling opportunities. It should be noted that hedge funds have initiated sizable new positions in the company over the past year, and like its brethren in the Permian, many consider the company a very solid takeover target.

Cimarex investors are paid just a 0.3% dividend. The Baird price target for the stock is $136, and the Wall Street consensus target was last seen at $124.65. The shares traded early Monday at $89.00 per share.

Continental Resources

This company has very large exposure to crude oil. Continental Resources Inc. (NYSE: CLR) is primarily a producer of onshore U.S. oil and has positioned itself in two growing hydrocarbon discoveries in the country: 1) the Bakken oil play in Montana and North Dakota, and 2) the SCOOP/STACK in Oklahoma, giving the company good growth opportunities for years to come.

Many on Wall Street feel that the company’s investment thesis is virtually unmatched. Investors get core Permian-like acreage at a non-Permian valuation. Of greatest importance, Continental is one of few diversified large-cap stocks that offers investors exposure to low-cost oil outside of the Permian. With current capacity and distribution issues in the Permian, this is another solid reason to own shares.

Baird has a $75 price target for the shares, which compares with the consensus target of $74.66 The shares at $64.70 Monday morning.

EOG Resources

This leading energy company shows up well on many Wall Street screens. EOG Resources Inc. (NYSE: EOG) is one of the largest independent exploration and production companies operating in the United States, Canada, Trinidad, the United Kingdom and China.

The company has a big well in Loving County in the Delaware Basin. Top analysts say the well ranks as one of the best they have ever seen in the basin, and it could easily impact other companies drilling in the region. EOG’s average dollar gross per well on a yearly basis is a stunning $4.3 million, which ranks third among all operators.

EOG shareholders are paid a small 0.72% dividend. The $157 price target at Baird is well above the $140.91  consensus price target. The stock was trading at $122.95 per share.

Pioneer Natural Resources

Many Wall Street analysts love this stock for a pure crude oil play. Pioneer Natural Resources Co. (NYSE: PXD) operates a modern fleet of more than 24 top performing drilling rigs throughout onshore oil and gas producing regions of the United States and Colombia. Pioneer production services are supported by 100 well-servicing rigs, more than 100 cased-hole, open-hole and offshore wireline units, and a range of advanced coiled tubing units.

Pioneer is a huge player in the Permian Basin and the Eagle Ford in Texas, and the company owns more than 20,000 locations in the world’s second-largest oil reservoir in the Midland Basin. With a stellar balance sheet, the company is poised to remain a top player in the Permian as it expects to deliver solid production growth in 2018 and beyond.

The company’s unmatched depth of low-cost inventory and balance sheet allow it to compete favorably in both mild and moderate recovery case scenarios. In addition to asset and financial strength, many analysts feel that Pioneer offers the second highest multiple contraction among the large-cap Permian pure-play peers, as well as the highest free-cash-flow yield.

Investors are paid a tiny 0.05% dividend. The Baird has set its price target at $225. But the consensus figure is $245.52. Pioneer traded at $186.10 share early Monday.

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Shares of these four top companies are trading at a discount to the NYMEX NAV and offer investors some very exciting potential upside. Plus, with the sanctions imposed again on Iran, supply may tighten some, driving oil prices even higher.

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