While oil stocks represented one of the strongest segments of the market earlier this year due to a combustible combination of skyrocketing inflation and Russia’s invasion of Ukraine, the present circumstance presents a somewhat ambiguous environment. With the Federal Reserve committed to attacking escalating prices, hydrocarbons (and other commodities) may face pricing pressure. As well, the Fed’s rate hikes could spark a recession.

On the other hand, discounted oil stocks may represent a viable opportunity because the sector may rise again. Sadly, the ongoing conflict in Ukraine will likely continue. And that means Russian hydrocarbons effectively remain shelved for perhaps years to come. Also, normalization trends bode cynically well for energy providers. With 90% of companies likely to recall their workers, commuting volume may rise.

While many if not most hydrocarbon players shot up into overvalued territory, a few names remain undervalued. Below are the discounted oil stocks to pick up on recession jitters.

Valero Energy (VLO)

Listed in the Fortune 500, Valero Energy (NYSE:VLO) represents an international manufacturer and marketer of transportation fuels, other petrochemical products and power. At the moment, Valero commands a market capitalization of $46.5 billion. On a year-to-date basis, VLO gained over 56%, which might not sound like a great discount on paper.

However, circumstances have been slow in the second half of 2022. For instance, in the trailing half-year period, shares dipped nearly 10%. And in the trailing month, VLO stares at a loss of almost 12%. Likely, much of this volatility centers on how the Fed will navigate its monetary policy. Though a hawkish strategy will raise borrowing costs, VLO may still benefit if full normalization in the workforce materializes.

Better yet, the market prices VLO at only 5.14-times trailing-12-month (TTM) earnings. In contrast, the sector median value is 8.3 times. Also, Valero’s price-to-sales ratio sits at 0.28 times, favorably lower than 82% of the competition. Thus, it’s one of the discounted oil stocks to pick up.

Matador Resources (MTDR)

Headquartered in Dallas, Texas, Matador Resources (NYSE:MTDR) is an independent energy company engaged in the exploration, development, production and acquisition of oil and natural gas resources in the U.S. Per its website, it focuses on oil and natural gas shale and other unconventional mechanisms. Currently, Matador commands a market cap of $6.84 billion.

Since the start of the year, MTDR gained 48.5% of equity value. Again, it doesn’t immediately sound like Matador ranks among discounted oil stocks. However, as stated above, circumstances shifted dramatically in the second half of 2022. In the trailing half-year period, MTDR slipped almost 6%. Further, in the past month, Matador absorbed a market loss of over 16%.

On the fundamental level, the market prices MTDR at 5.9-times trailing earnings. In contrast, the sector median value is 8.3 times. Further, the company’s price-to-operating-cash-flow ratio is 3.68 times, favorably below 61.5% of the competition.

Epsilon Energy (EPSN)

Based in Houston, Texas, Epsilon Energy (NASDAQ:EPSN) is an on-shore focused independent oil and natural gas company engaged in the acquisition, development, gathering and production of oil and gas reserves. Per its website, Epsilon’s areas of operation are the Marcellus basin in northeast Pennsylvania and the Anadarko basin in Oklahoma. Presently, the company commands a market cap of just under $153 million.

In terms of discounted oil stocks to buy, EPSN is a bit friendlier for those who dislike buying into strength. Still, with a 17% YTD performance, it doesn’t exactly appear a contrarian play. However, shares have been choppy in recent trades. For example, in the trailing month, EPSN slipped nearly 9%. And its trailing five-day performance only lifted shares by a little over half-a-percent.

However, the value proposition as one of the cheapened oil stocks comes into clearer view in the financials. Per Gurufocus.com, Wall Street prices EPSN at 4.7-times trailing earnings. This ranks favorably below 71.5% of the competition.

PrimeEnergy Resources (PNRG)

Headquartered in Stamford, Connecticut, PrimeEnergy Resources (NASDAQ:PNRG) is an independent oil and gas company actively engaged in acquiring, developing and producing oil and natural gas. Specifically, the company operates approximately 710 active wells and owns non-operating and royalty interests in over 822 additional wells. At time of writing, PrimeEnergy carries a market cap of almost $158 million.

As with the other oil stocks on this list, PNRG enjoyed a solid performance this year, gaining roughly 17%. While that might not appeal to those seeking a strict discount in the charts, consider that in the trailing half-year period, PNRG slipped nearly 9%. Still, it’s fair to point out that shares are gaining momentum recently. In the trailing month, PrimeEnergy popped up over 2.5%.

According to Gurufocus.com’s proprietary calculations for fair market value, PNRG rates as a modestly undervalued investment. Against traditional indicators, the market prices shares at just under 5-times trailing earnings. This ranks favorably below almost 69% of the competition.

Parex Resources (PARXF)

Based in Calgary, Alberta, Parex Resources (OTCMKTS:PARXF) bills itself as a sustainable oil and gas producer, responsibly developing the resources needed to fuel social and economic development. Per its website, the Canadian hydrocarbon specialist is now the largest independent exploration and production company in Colombia. Presently, the company features a market cap of 2 billion CAD (roughly equivalent to $1.47 billion).

One aspect about Parex that might appeal to speculative contrarian investors is its market performance. Since the beginning of this year, PARXF gave up almost 21% of equity value. Further, in the trailing half-year period, shares dropped nearly 34%. Near term, shares still find themselves in the red, with a 7.6% loss in the trailing month.

Intriguingly, though, this dynamic makes Parex one of the most undervalued oil stocks to buy. The market prices PARXF at 3.5-times trailing earnings. Also, it prices shares at only 3.9-times forward earnings. Both stats rate well below their respective sector median values.

Imperial Oil (IMO)

Also headquartered in Calgary, Alberta, Imperial Oil (NYSEAMERICAN:IMO) represents Canada’s second-biggest integrated oil firm. Per its public profile, Imperial Oil is a significant producer of crude oil, diluted bitumen and natural gas. Currently, Imperial Oil commands a market cap of $30.7 billion.

As with most of the oil stocks on this list, IMO performed very well this year. Since the January opener, shares gained almost 35% of market value. While this won’t appeal to all contrarian traders, a discount materialized in the charts recently. In the trailing month, shares dropped 13%. As well, in the past five sessions, IMO slipped 5%.

Per Gurufocus.com’s proprietary FMV calculation, IMO rates as modestly undervalued. Against traditional metrics, the market prices shares at 0.8-times sales. However, the sector median value is 1.06 times, translating to Imperial Oil ranking favorably below 60.5% of the competition.

Woodside Energy (WDS)

Based in Perth, Western Australia, Woodside Energy (NYSE:WDS) is an Australian petroleum exploration and production company. Per its public profile, Woodside is the operator of oil and gas production in Australia and also Australia’s largest independent dedicated oil and gas company. At the moment, the company carries a market cap of 67.7 billion AUD (approximately $46.4 billion).

One of the top-performing oil stocks, since the start of the year, WDS gained a whopping 52%. Again, it doesn’t sound like much of a discount at face value. However, the second half of this year presented far different circumstances. In the trailing six months, WDS gained only about 9%. Also, in the trailing one-month period, it slipped nearly 7%.

Per Gurufocus.com’s proprietary calculation for FMV, WDS is a significantly undervalued investment. Against traditional valuation metrics, it’s somewhat middling. However, investors should also note its strong profitability. For instance, Woodside’s net margin stands at 31.7%, beating out 82.5% of the competition.

On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.