With the price of crude at a six-year low, the big oil stocks are finally cheap enough to start buying, Citigroup told clients Tuesday.
When reached for comment about the analyst report, Citi said this was the first bullish evaluation of energy stocks from the firm since the start of 2011.
WTI oil prices were more than $90 a barrel back then. They fell as low as $41.35 a barrel last week.
The sector now trades at a 1.2 times price-to-book ratio, which is below the trough valuations in the first quarter of 2009 and fourth quarter of 1998, periods when crude prices also collapsed, notes Citi's Alastair Syme.
"The oil market is oversupplied, pushing prices close to effective cash costs. But prices cannot stay at cash costs forever," wrote Syme. "Some risk that the market is yet to reach bottom again, we think that risk against the backdrop of where Big Oil equity valuations are, is a risk that is beginning to be worth taking."
When the industry does drive profitability back to midcycle levels the sector can trade to a fair value of 1.75 times book, which represents a 45 percent price upside from here, states Syme in the note.
"We think current valuations discount little in the way of the group restoring profitability back to long-run averages," said Syme.
Read More Goldman's 2015 forecast: 'Flat is the new up'
The report outlined the road map to get back to those profitability levels:
"Cost-cutting and capital discipline proved successful strategies in the mid-80s and late-90s down-cycle, and we see no reason why they will not do so again. This will be a multiyear process that involves both driving behavioral changes within the companies as well as taking advantage of a global supply-chain where overcapacity should allow for deflation. We see this mix of the road map back as 20 percent cost-cutting, 40 percent growth (enjoying the benefits of 2010-14 investment and now making better reinvestment choices) and 40 percent price."
Here are the oil stocks Citi recommends to buy…
