Buffett-Style Bargains: Energy Stocks Go on Sale

​Warren Buffett may not have bought them yet—but if he’s watching, the moment is ripe. Nearly a third of all U.S. mid- and small-cap oil and gas stocks are now trading below their book value, presenting the kind of value play that Ben Graham and Buffett built their careers on. In today’s overpriced market, these energy stocks are starting to look like hidden treasure.

This is the highest level of undervaluation since the pandemic, and it’s catching the eye of deep-value investors like Cole Smead, CEO of Smead Capital Management, who said bluntly: “We’re going to take advantage of a lot of suckers.”

Tariffs Trigger the Fire Sale
The opportunity is largely thanks to Trump’s April tariff wave, which hit global trade sentiment hard. Crude oil dropped to $55 a barrel, wiping 14% off the energy sector and sparking fears of a supply glut and economic slowdown. Although oil prices have rebounded slightly, energy remains one of the worst-performing sectors in Q2.

Now, with companies like Murphy Oil, Crescent Energy, and Noble Corp. trading for less than the value of their assets, many see echoes of past cycles where energy bounced back hard—and fast.

Buybacks and Buffett-Esque Moves
Some energy firms are leaning into the sell-off. Cenovus Energy has nearly tripled its share buybacks quarter-over-quarter, while Diamondback Energy is shifting strategy to prioritize repurchasing stock over debt reduction. “Buybacks are the right thing at these levels,” said CEO Travis Stice.

Still, not all companies have the balance sheet strength to act. Chevron has already scaled back its own buybacks due to the oil price dip.

Valuation Debate: Book Value or Cash Flow?
There’s still debate on how to measure value in the energy sector. While book value offers a clean, Buffett-friendly lens, analysts like BMO Capital’s Jeremy McCrea prefer cash flow, EBITDA, and reserve valuations—metrics that better reflect the volatile nature of commodity prices. Even so, McCrea agrees: “It’s pretty uncomfortable right now... and that’s historically the best time to buy.”

Bottom Line
​It’s not a perfect setup. Oil’s still under pressure, and sentiment is shaky. But if history rhymes, this moment might just mark the beginning of another energy comeback—and smart money knows it. The sector might be battered, but for value hunters, it’s starting to look like a classic Buffett bargain bin.