The energy sector has experienced a significant pullback in recent months, which could present compelling buying opportunities for value investors. While the sector remains up 2.59% year-to-date, it's far off the double-digit gains it saw earlier in the year. The sector has now pulled back nearly 13% from its 52-week highs in April.

One major factor weighing on the sector is the price of oil, which has dropped to 52-week lows, with Crude Oil Futures trading near $68. This decline has put pressure on energy stocks, but for investors with a long-term perspective, the sector's recent downtrend might offer the chance to purchase some of its top performers at discounted prices.

If the sector continues to correct, mainly if the Energy Select Sector SPDR Fund (NYSE: XLE) pulls back toward its $80 support level, a multi-year support zone, bargain buy opportunities could emerge.

Let's examine two leading energy stocks that might be poised for a bounce and consider what price levels investors should pay attention to.

2 Energy Stocks to Watch for Bargain Buy Levels

Devon Energy 

Devon Energy (NYSE: DVN), a $26 billion independent oil and gas company headquartered in Oklahoma City, looks increasingly attractive for value investors based on several key metrics. Devon's price-to-earnings (P/E) ratio has fallen into deep value territory, now sitting at just 7.89. The company also offers a dividend yield of 2.13%, making it a potential income play alongside its value metrics. Furthermore, Devon is projecting earnings growth of 16.2% for the full year, a notable indicator of its potential to weather current market challenges.

Devon's stock has underperformed the broader market and its sector year-to-date, down over 8%. However, the stock is down nearly 25% from its 52-week highs, which might make it more appealing to long-term investors. It's approaching a significant support area near $40, a level that has historically been a floor for the stock. A short-term bottom could be confirmed if DVN can find buyers near this area or if it flushes out toward $35 and then recovers back above $40. This could signal a buy opportunity, particularly if momentum shifts back in favor of the stock.

Analysts remain bullish on DVN, with a consensus price target of $58.63, representing over 40% upside from its current levels. The company's recent earnings report supports this optimism. On August 6, 2024, Devon posted $1.41 per share earnings, beating the consensus estimate of $1.26 by $0.15. Devon also reported $3.92 billion in revenue for the quarter, surpassing analysts' expectations of $3.90 billion. This revenue figure represents a 13.4% year-over-year increase, a positive sign for future growth.

Occidental Petroleum

Occidental Petroleum (NYSE: OXY) is another energy giant worth watching during this pullback. With a market capitalization of $47 billion, Occidental is an international oil and gas company that has experienced significant declines this year, like Devon Energy. The stock is down nearly 13% year-to-date, underperforming the broader energy sector.

Notably, OXY broke below significant support near $55 last week, intensifying its recent selloff. However, this could also signal a potential buying opportunity as the stock approaches value levels. Occidental's current P/E ratio has dropped to 12.83, down from 14 just a few weeks ago, while its forward P/E is around 11. The company is projecting earnings growth of 31% for the full year, which could provide a tailwind for future performance.

Despite the recent selloff, analysts see a substantial potential upside in Occidental. The consensus price target for the stock is $71.50, implying a 37% upside from current levels. Notably, Occidental is a significant holding of Warren Buffett's Berkshire Hathaway (NYSE: BRK.B), which adds another layer of confidence for value investors considering the stock. However, further downside could occur with the stock recently breaking below support. If Occidental can find support near $50 and stabilize, it could spark the end of the pullback, creating an ideal bargain buy opportunity.

On August 7, 2024, the company reported earnings per share of $1.03, significantly beating the consensus estimate of $0.77 by $0.26. Occidental also reported revenue of $6.88 billion for the quarter, just shy of analysts' expectations of $6.93 billion. The company's revenue was up 2.2% year-over-year, indicating steady growth despite the sector's broader struggles.