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Oil and gas stocks have been pretty hot in the market as of late as oil continues to trade over $100 a barrel. Furthermore, investors have been attracted to natural resource stocks as an inflation hedge because of the US Federal Reserve continuing to print money to support the economy. With the economy continuing its expansion and no end in sight for the pumping of money by the Fed, the catalysts are in place for a further rise in oil and gas stocks. Here are three oil and gas stocks that are either being overlooked or undervalued by investors and have significant upside from current levels.

Chevron (NYSE:CVX) is one of the largest integrated energy companies in the world, sporting a market cap of over $200 billion. Chevron is involved in virtually every facet of the energy industry. The company explores for, produces and transports crude oil and natural gas; refines, markets and distributes transportation fuels and lubricants; manufactures and sells petrochemical products; generates power and produces geothermal energy; provides energy efficiency solutions; and develops the energy resources of the future, including biofuels.

With an analyst consensus target price of $125 a share, Chevron is one of most undervalued domestic large cap stocks by analysts. It is also trading at a discount to its historical P/E. With a current P/E of 7.8, it is trading below its 5 year average of 9.4. With a forward P/E ratio of 8, the stock is being priced like it will never grow again but that contradicts what analysts are saying. In 2012, analysts project revenue growth of over 11%. It is no coincidence that analysts expect such growth from Chevron. In March, the company announced that it is on track to achieve 20% production-growth target by 2017.

SandRidge Energy (NYSE:SD) is an oil and natural gas company with a principal focus on exploration and production. SandRidge and its subsidiaries also own and operate gas gathering and processing facilities and CO2 treating and transportation facilities and conduct marketing and tertiary oil recovery operations. In addition, Lariat Services, a wholly-owned subsidiary of SandRidge, owns and operates a drilling rig and related oil field services business. SandRidge focuses its exploration and production activities in the Mid-Continent, Permian Basin, Gulf of Mexico, West Texas Overthrust and Gulf Coast.

Both analysts and insiders love this stock alike. Analysts have a consensus price target on the stock of just over $11 a share for upside of 45% from current levels. In late March, it was reported that SD's Director, Daniel Jordan, made two large purchases of SD's stock, buying two 50,000 share lots on different days for a total expenditure of nearly $800,000.

Petroleo Brasileiro (NYSE:PBR) is the largest Brazilian energy company with a market cap of over $160 billion. The company struggled in 2011 as growth for PBR was more representative of a mature oil and gas company in the western world than a growing oil and gas company with heavy exposure to the emerging markets. Because of the struggles, the company made some changes and named a new CEO in Graça Foster. She has significant experience work with the company and has worked at PBR for 31 years, where she has been serving as the director for the Gas & Energy area and as the chairwoman of Gaspetro since 2007.

Despite the challenges and change at the top at PBR, analysts and investors still like the stock. Wall Street analysts suggest that the upside in the company is 50% with a consensus target of $37.50 on the stock. In a recent article on Seeking Alpha, it was suggested that PBR could be the world's best oil stock with a price target of over $50 a share, suggesting upside of 100%.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: 3 Oil And Gas Stocks Being Overlooked By The Market