Forget the S&P 500 – here are the US stocks that I think are in the crosshairs and look like a bargain.

From an investment point of view, S&P 500 Index looks risky now. Due to heavy concentration in some expensive stocks, many analysts are forecasting weak returns over the next 10 years.

This could cause investors to turn away from the US for opportunities. But I think this is a mistake – there are stocks outside the index that I really like the look of.

Oil company

One example is Chord Energy (NASDAQ:CHRD). Earlier this year, the company merged with Enerplus to form the largest oil producer in the Williston Basin.

My thesis is relatively simple. Management says its assets will allow it to produce oil for 10 years at low prices, and I think this will generate high returns for investors.

The Chord’s balance is extremely strong. And it allows the company to return significant amounts of the cash it generates to investors through dividends and share buybacks.

This sets them apart from other oil companies and makes them very attractive in my opinion. I think this looks like a good deal, even if US stocks as a whole are at historically expensive levels.

Production

Chord’s position in Williston means its costs are higher than its Permian-based peers. But I think there is still a lot to be excited about for investors.

Back in August, the company expected it would generate about $700 million in free cash flow this year with oil prices in the $70s. And starting next year, this will be facilitated by the synergy from the Enerplus deal.

Since then, the price of West Texas Intermediate (WTI) has fallen to around $67 per barrel. But Chord’s market capitalization is currently under $8 billion, which makes things very interesting in my opinion.

At this level, there may well be very healthy free cash flow returns available to investors even if oil prices continue to fall. But there is more to this story.

Dividends

Instead of exploration, Chord hopes to return free cash to shareholders. The firm strives to maintain a leverage ratio below 1 and sets its dividend policy based on how well it manages to do so.

The company’s net debt to EBITDA ratio currently stands at 0.3. At this level, 75% of the free cash flow generated by the company is returned to investors in the form of dividends.

A positive outlook on WTI’s prospects is a prerequisite for investing in oil stocks in general. But if the oil price stays above $70 over the next 10 years, things could get very interesting.

If I invested £1,000 today, I think there’s a chance I could get 100% of that back in dividends over the next 10 years. And with interest rates falling, there aren’t many such opportunities.

A stock worth considering?

There are many reasons to doubt the outlook for oil prices. The biggest threat right now is probably OPEC increasing production at a time when demand is weak.

However, investors with a positive outlook for oil may want to take a look at Chord Energy. US stocks in general can be expensive, but I think there is still great value here.