After hitting a low in the mid-$70s in late September, crude oil has soared near $90 per barrel on rumors that OPEC would reduce supply by a startling 2 million barrels per day. These three oil stocks are drastically undervalued.

1. Diamondback Energy Stock: Capitalizing on Its Low Stock

Diamondback Energy (NASDAQ:FANG) predicts that at $90 per barrel, it can generate $4.3 billion in free cash flow. The oil company’s market capitalization is $24.1 billion. These figures indicate that the firm is trading at 5.6 times its free cash flow, or an 18% free cash flow yield. Compared to the main stock market indices, it seems extremely cheap. The S&P 500 now has a free-cash-flow yield of 5%, while the Nasdaq has a lower yield of 4%.

Diamondback Energy has profited from its low stock price. The oil business recently repurchased $303 million in shares in the second quarter and another $200 million in the third quarter. Meanwhile, its share buyback authority was recently increased to $4 billion. This should allow the corporation to continue devouring its dirt-cheap shares.

2. Devon Energy: Saving money via the contract

Devon Energy (NYSE:DVN) expects to generate $6 billion in free cash at $85 oil, which will climb in tandem with oil prices. With a market capitalization of $46.7 billion, it trades at less than 7.7 times free cash flow, yielding more than 13%. In comparison to the S& P 500 and Nasdaq, it is substantially undervalued.

Devon has also increased its potential to create cash by allocating some of its financial flexibility to the acquisition of cash-generating oil assets. RimRock Oil and Gas and VALIDUS ENERGY had their leasehold rights and associated properties purchased by the businesses. These highly accretive transactions will allow Devon to generate more cash in the future, making the stock seem even cheaper.

3. Marathon Oil: A bottom-of-the-barrel appraisal

Marathon Oil (NYSE:MRO) may generate $4.5 billion in free cash flow if oil prices average $100 per barrel. For every $1 shift in the oil price, the business expects that figure to drop by around $60 million on an annual basis. Assuming $90 oil, Marathon can generate $3.9 billion in free cash flow per year. Marathon trades at 4.7 times free cash, or a 21% free cash flow yield, with a market valuation of roughly $18 billion. That makes it seem absurdly undervalued.

Marathon has taken advantage of the circumstances by buying up its stock. Over the last year, the business has repurchased $2.3 billion in shares, lowering its share count by 15%. The Low-risk alternatives to investing in the oil market

Investors are undervaluing Diamondback Energy, Devon Energy, and Marathon Oil for the cash they can generate at $90 oil.

With oil prices rising again due to OPEC’s output reduction, these oil corporations may generate even more free cash flow in the future. When combined with their outrageously low share prices, they seem to be low-risk options to participate in the oil market’s upward potential.

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