Energy stocks hold some incredible potential, top value investor Rich Pzena said Tuesday.
"I think the integrated oil stocks are selling for the lowest valuations they've sold for in my lifetime, and that's pretty long. The reasons are pretty straightforward. The big oil companies have spent a lot of money over the last five or six years, and very little to show for it," he said. "Oil prices are weakening. The strong demand story we had seven, eight years ago is gone, and so they've gotten very, very cheap. The question is: Are they going to up? I think the answer is yes."
BP had some "hair on it" because of its liability in the 2010 Gulf of Mexico spill and Russian exposure, Pzena said. "But those things pale in comparison to the massive size of their worldwide oil and gas reserve base that you're just getting at single-digit multiples of current earnings."
Pzena, who oversees $27 billion in assets as founder and co-chief investment officer of Pzena Investment Management, counts Royal Dutch Shell, BP and Exxon Mobile among his top holdings.