After many years of being cast aside, oil stocks came roaring back in a world rocked by inflation and geopolitical uncertainty. Unfortunately, those same oil stocks started off 2023 on the wrong foot. All with oil prices slumping on fears of a potential recession and ensuing slowdown in global demand. In addition, recent problems in the banking sector have caused a liquidity squeeze that is impacting many sectors, including energy. But investors shouldn’t lose the faith in oil stocks. The industry is still absolutely gushing free cash flow and dividends at current oil price levels.

And, if we’ve learned anything from the Federal Reserve over the past 15 years, it’s that they tend to meet every crisis by pumping more liquidity into the economy. That, in turn, tends to cause inflation to rise and commodity prices such as oil to gain steam. All this to say that oil stocks are cheap today on their own merits and could come surging back to the highs once the Fed changes course and starts to provide support to the economy.

Exxon Mobil (XOM)

Exxon Mobil (NYSE:XOM) is one of the world’s largest and most successful companies. Its operations alone produce more income than the GDP of various small countries. And, even after the run-up in shares recently, XOM stock remains intriguingly cheap. The company now has a market capitalization of around $410 billion. Meanwhile Exxon Mobil earned $56 billion in net income last year.

For comparison’s sake, consider Nvidia (NASDAQ:NVDA). Nvidia has a market cap of $630 billion, or roughly 50% larger than Exxon Mobil. Yet Nvidia earned just $4.4 billion last year, or less than one-tenth that of Exxon. Nvidia has a more attractive business and future prospects than Exxon, no disputing that, but the disparity in valuations seems excessive.

In any case, Exxon Mobil is set to keep on winning. The company’s heavy investments in refining and chemicals have paid off in spades with refining profit margins soaring in recent years. Meanwhile, Exxon’s aggressive counter-cyclical investments in countries such as Guyana in the late 2010s are now paying off in a major way.

Chevron (CVX)

Chevron (NYSE:CVX) has long been Exxon’s closest peer among the major oil companies. And it is having similar success today. Chevron can credit much of that to its bold investments in massively-expensive liquefied natural gas (LNG) facilities. These can cost tens of billions of dollars to set up and faced seemingly uncertain demand prospects and various operational setbacks.

However, Chevron preserved and has been rewarded thanks to the surge in LNG prices over the past year. The war in Ukraine has taken a lot of existing natural gas capacity offline, making it imperative to secure alternatives. Chevron’s resources hold tremendous value given this framework. Chevron’s $33 billion acquisition of Anadarko Petroleum in 2019 was also controversial, but ended up being a winner thanks to the subsequent surge in oil and gas prices. Putting it altogether, CVX stock has surged to new all-time highs in Nov. 2022. Even so, the stock is at just 10 times forward earnings while offering a 4.0% dividend yield today.

Valero (VLO)

Valero (NYSE:VLO) is North America’s largest independent refining company as it operates more than a dozen facilities around the continent. For many years, refining was viewed to be a low-quality industry prone to brutal busts during cyclical downturns. Refining stocks tended to be terrible investments.

All that changed around a decade ago, however. The rise of fracking created a lot more domestic oil production. That, in turn, gave refineries access to lower-cost domestic crude instead of having to source inputs from far-flung international locales. In addition, no major new refining operations have been built in the U.S. for decades. This lack of new supply, combined with several refinery closures, has led to less capacity. This has structurally shifted profitability metrics in favor of existing refining companies, of which Valero is the largest.

Since Valero is an investment based on oil and gas margins, rather than just the price of crude, VLO stock has some insulation from the day-to-day fluctuations in the price of oil. Long story short, Valero should remain highly profitable whether oil rises or falls going forward. Shares are at less than six times forward earnings today.

BP (BP)

Investors have long viewed BP (NYSE:BP) with disdain. The energy giant arguably lost its way in the late 2000s. First, there was the Deepwater Horizon disaster which both sullied BP’s reputation and also cost in billions in various assorted legal and operational costs. More recently, BP has invested heavily in renewable energy sources, perhaps in partial reaction to the Deepwater Horizon fiasco. However, these renewable energy investments failed to achieve management’s desired returns on investment, dragging down BP’s overall profitability.

Now, though, there’s light at the end of the tunnel. Earlier in 2023, BP’s leadership announced that it will be curtailing its investments while focusing its capital outlays in its core competencies in oil and gas. That’s great news for investors that own BP stock primarily for its highly profitable traditional energy assets.

BP stock jumped to new highs following the strategic repositioning. However, its share performance has still been far less than that of most other global oil and gas giants. As such, shares remain attractive with BP stock at just 5.5x forward earnings and a 4.5% dividend yield.

Ecopetrol (EC)

Speaking of gushing dividends, Colombia’s Ecopetrol (NYSE:EC) is a great example of the tremendous profitability currently found in the oil sector. Ecopetrol is the state-managed oil company of Colombia. It controls both the majority of the country’s oil and gas production and also nearly 100% of its oil refining capacity. In addition, Ecopetrol is the nation’s leader in energy infrastructure (such as power lines), pipelines, and renewable energy transmission. It also owns the concessions for nearly 1,000 kilometers of toll roads.

Ecopetrol shares got walloped in 2022 thanks to uncertainty around Colombia’s new left-wing president. That said, the Colombian government owns 88% of the company and is highly incentivized to keep oil production flowing and dividends gushing.

Earlier this year, Ecopetrol announced that it will be paying a dividend of 593 Colombian Pesos per ordinary share. Each American Depository Receipt (ADR) of EC stock equals 20 shares the Colombian version, amounting to a dividend of 593 times 20 or 11,860 Colombian Pesos. That translates to $2.49 per U.S. share of EC stock as of this writing, or a jaw-dropping 15.96% annual dividend yield. Ecopetrol can afford such a massive payout since it is exceptionally profitable. Shares are currently trading for just three times earnings. Colombian assets deserve to trade with a political discount, sure, but EC stock is far too cheap compared to other oil alternatives in foreign countries.

Canadian Natural Resources (CNQ)

Canadian Natural Resources (NYSE:CNQ) is one of Canada’s largest companies. The company has a large position in the Albertan oil sands. These oil sands were traditionally viewed as a subpar asset compared to normal oil wells. Oil sands consist of rocks covered in an oily-sludge that must be refined to get usable crude. This came at higher cost and difficulty than conventional oil extraction.

However, the oil sands industry has developed much more sophisticated techniques for processing the oil sands. Meanwhile, the world has tapped many of the easiest conventional oil fields, making the oil sands a much more useful alternative. In addition, oil sands projects tend to operate for decades after being started, whereas oil wells often have rapid decline rates. In a world where many politicians and environmentalists have made it hard to get approval for new oil and gas exploration, a project that is already in production has a tremendous regulatory advantage.

Canadian Natural, with its large scale operations, is well-positioned for this reality. Shares trade for less than 6 times forward earnings and offer a 5% dividend yield. In addition, the company has finished paying down debt and will now transition to using all its free cash flow beyond the dividend to buy back stock. With the recent dip in CNQ’s stock price, that buyback will get more bang for the buck, allowing Canadian Natural to supercharge shareholder returns going forward.

Suncor (SU)

Suncor (NYSE:SU) is the other leader in Canadian oil production. Like Canadian Natural, Suncor also has a large position in the Alberta oil sands. Its differentiating factor from Canadian Natural is that Suncor owns refining assets and also a network of gas stations. This allows it to vertically integrate its production and obtain higher profit margins on its own crude.

That has been especially useful in recent years as Canadian crude has sold at a discount to global prices due to a shortage of pipeline capacity. Suncor can avoid much of the hit from that thanks to its refining assets. SU stock has fallen considerably since its 2022 peak amid the drop in crude oil prices. Economic fears are certainly weighing on energy stocks such as Suncor. However, the company is still gushing cash from operations. SU stock sells for less than 5 times forward earnings and offers a greater than 5% dividend yield.

On the date of publication, Ian Bezek held a long position in CNQ, SU, XOM, EC, and BP stock. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.