7 Undervalued Oil and Gas Stocks Ripe for Gains

BOSTON (TheStreet) -- World oil prices are down by about 20% from the first quarter's $100 a barrel crude, hurt by the European sovereign debt debacle, the depressed economies of the U.S. and China, and a huge domestic supply of natural gas and a rising supply of oil from the Middle East.

And investors took that to mean there's not much profit to be had in the energy sector, as selling pushed share prices down 5.3% this year for the group, versus the benchmark S&P 500's 6.8% gain.

As a result of the sell-off, some of the energy industry's best companies' shares are in the bargain bin and trading at prices far below reasonable valuations.

But the sharp declines many of these companies have seen defy logic, at least from a long-term investment perspective, as they are positioned to take ongoing advantage of what is surely a long-term trend -- oil and natural gas generated and consumed in North America.

One prime example of the market giving up on quality is the exploration and production giant Apache(APA) , which is selling at a forward price-to-earnings ratio of 6.8, or just under half that of the S&P 500's 12.9 P/E.