Investing.com -- Energy stocks have struggled in April, and investors are now searching for opportunities in the battered sector, according to Mizuho analysts.

"Energy has been one of the weakest sectors in the market since ’Liberation Day’ (April 2), with the XLE (NYSE: XLE ) down ~12% and the XOP down ~14%, compared to the S&P 500 down ~2%," Mizuho wrote in a note Sunday.

The firm said the sell-off has been driven by "macroeconomic uncertainty" and "declines in both oil and gas prices," compounding pressure on the sector.

However, despite the sharp moves, Mizuho believes "companies are not experiencing the level of ’pain’ the markets are imputing just yet, and are likely to maintain 2025 capital and cash return plans."

Mizuho assessed energy stocks’ current value using a price-to-net asset value (P/NAV) analysis.

"While there are many valuation methodologies, we prefer Net Asset Value for our coverage given its ability to capture long term reserve, inventory, margin and price trends," the analysts said.

They noted that "all sub-sectors are trading below the median of the 5-year range for P/NAV using Street consensus."

In terms of stock picks, Mizuho said, "Given the current market environment, we continue to prefer ’defensive’ and ’quality’ operators."

In the small and mid-cap (SMID) group, they favor CHRD and PR, while in large caps, they prefer FANG and CTRA, and in the minerals space, they like VNOM.

The analysts also observed that "Refining and IOC sub-sectors are trading at the ~20th percentile," while "gas-focused E&Ps appear to be closer to the historical average P/NAV," suggesting some relative resilience among natural gas names.