Warren Buffett Just Picked up This Buy-Rated Energy Stock

NYSE: OXY | Occidental Petroleum Corporation  News, Ratings, and Charts

OXY – Leading oil and gas company Occidental Petroleum (OXY) reported impressive first-quarter results. Shares of OXY have gained in double digits so far this year, outperforming the broader market, thanks to surging energy prices. Moreover, Warren Buffett has recently added more OXY shares to his portfolio. And this stock is rated Buy in our proprietary rating system. Continue reading….

With a $55.18 billion market cap., Occidental Petroleum Corporation (OXY) engages in the acquisition, exploration, and development of oil and gas properties in the United States, the Middle East, Africa, and Latin America. The company operates through three segments: Oil and Gas; Chemical; and Midstream and Marketing.

On Monday, Warren Buffett’s Berkshire Hathaway Inc. (BRK.A) announced that it had purchased another 797,389 shares of OXY, raising its stake to about 16.4% in the company. Berkshire is also the largest individual shareholder in OXY.

OXY shares have gained 103.1% year-to-date and 88.3% over the past year to close the last trading session at $58.88. The surging oil and gas prices have contributed to the stock’s rally. The stock hit its 52-week high of $74.04 on May 31, 2022.

On the other hand, on March 22, OXY entered an agreement with an affiliate of SK Trading International, a subsidiary of SK Innovation Co. Ltd., for net-zero oil created by using environmental attributes generated from carbon dioxide (CO2) removed from the atmosphere by 1PointFive’s planned Direct Air Capture (DAC) facility and sequestered in OXY’s enhanced oil recovery (EOR) reservoirs in the U.S. Permian Basin.

Under the agreement, OXY’s marketing affiliate may provide SK Trading International’s affiliate with an opportunity to purchase up to 200,000 barrels of net-zero oil per year for five years to develop net-zero products. This agreement is expected to promote the company’s sustainability goals and boost its revenue streams.

Here is what could influence OXY’s performance in the upcoming months:

Robust Financials

OXY’s net sales increased 57.7% year-over-year to $8.35 billion in the fiscal 2022 first quarter, ended March 31, 2022. The company’s income from continuing operations amounted to $4.88 billion, up 1,530.8% year-over-year. In addition, its operating cash flow from continuing operations grew 311% year-over-year to $3.24 billion.

Furthermore, the company’s adjusted income attributable to common stockholders and adjusted earnings per share came in at $2.13 billion and $2.12, registering increases of 1,664% and 1,513.3%, respectively, from the prior-year period.

Favorable Analyst Estimates

Analysts expect OXY’s revenue for the fiscal 2022 second quarter (ending June 2022) to come in at $9.94 billion, representing a rise of 65.4% from the same period in 2021. The $2.93 consensus EPS estimate for the current quarter indicates an 815.6% year-over-year increase.

Also, Street expects the company’s EPS to grow 23.5% per annum over the next five years. The company has an impressive earnings history as it has surpassed the consensus EPS estimates in each of the trailing four quarters.

High Profitability

OXY’s trailing-12-month gross profit margin of 64.70% is 61.2% higher than the 40.13% industry average. Its trailing-12-month EBITDA margin of 53.05% is 140.8% higher than the 22.03% industry average. Likewise, the company’s trailing-12-month net income of 25.31% is 420.8% higher than the industry average of 4.86%.

Furthermore, OXY’s trailing-12-month ROCE and ROTA of 55.09% and 9.89% are higher than the industry averages of 10.62% and 3.54%, respectively.

Discounted Valuation

In terms of forward non-GAAP P/E, OXY’s 5.53x is 21.4% lower than the 7.03x industry average. Its 3.93x forward EV/EBITDA is 31.3% lower than the 5.77x industry average. Also, the stock’s 2.98x forward Price/ Cash Flow is 25.3% lower than the 3.98x industry average.

POWR Ratings Show Promise

OXY has an overall B rating, equating to a Buy in our POWR Ratings system. The POWR Ratings are calculated by accounting for 118 distinct factors, with each factor weighted to an optimal degree. 

OXY has a grade of A for Momentum. This is justified, as the stock is currently trading above its 50-day and 200-day moving averages of $62.07 and $44.47, respectively. In addition, it has a B grade for Quality, which is in sync with its higher-than-industry profitability ratios.

OXY is ranked #31 out of 99 stocks in the B-rated Energy – Oil & Gas industry.

Beyond what I have stated above, we have also given OXY grades for Sentiment, Growth, Value, and Stability. Get access to all the OXY ratings here.

Bottom Line

OXY’s impressive financials and industry tailwinds are expected to drive its performance in the upcoming quarters. Moreover, favorable analyst sentiment and Buffett’s faith in the company’s prospects make it an ideal candidate to invest in now.

How Does Occidental Petroleum Corporation (OXY) Stack Up Against its Peers?

OXY has an overall POWR Rating of B. One could also check out these other stocks within the Energy – Oil & Gas industry with an A (Strong Buy) rating: Adams Resources & Energy, Inc. (AE), PrimeEnergy Resources Corporation (PNRG), and Whitecap Resources, Inc. (SPGYF).


OXY shares were trading at $58.89 per share on Friday afternoon, up $0.01 (+0.02%). Year-to-date, OXY has gained 104.01%, versus a -20.12% rise in the benchmark S&P 500 index during the same period.


About the Author: Mangeet Kaur Bouns


Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet’s looks to help retail investors understand the underlying factors before making investment decisions. More...


More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
OXYGet RatingGet RatingGet Rating
AEGet RatingGet RatingGet Rating
PNRGGet RatingGet RatingGet Rating
SPGYFGet RatingGet RatingGet Rating

Most Popular Stories on StockNews.com


:  |  News, Ratings, and Charts

How to RIDE the Next Bull Market?

Growth stocks are back! And, they are leading the S&P 500 (SPY) higher after the brutal bear market investors experienced this year. Read on to find out the best strategy to profit from the next big bull market in growth stocks...

:  |  News, Ratings, and Charts

The 3 Top Aerospace and Defense Stocks to Buy Now

The U.S. aerospace and defense industry is evolving, supported by lucrative fiscal investments and rapid defense technology advancement. Moreover, given the growing tension between China and Taiwan, it could be wise to add quality aerospace and defense stocks, Lockheed Martin (LMT), L3Harris Technologies (LHX), and Raytheon Technologies Corp. (RTX) to your portfolio now. Continue reading…

:  |  News, Ratings, and Charts

History Lessons Say Stocks About to Head Lower Again

Yes, history has a way of repeating itself. Like how periods of high inflation are followed by recessions and bear markets time and time again. Or how periods of high stock valuations often lead to extended bear markets like 2000 to 2003…and yes that may be repeating now. Before you believe that the next bull market has emerged you may want to read this article to appreciate why the odds point to more downside ahead.

:  |  News, Ratings, and Charts

2 Momentum Stocks Crushing the Bear Market

Valero Energy (VLO) and Shell (SHEL) have maintained strong momentum amid the highly uncertain market conditions. With recession fears expected to keep the market under pressure in the near term, it could be wise to buy these stocks now to benefit from their momentum, which might continue for some time based on their fundamental strength irrespective of the market conditions. Read on…

:  |  News, Ratings, and Charts

History Lessons Say Stocks About to Head Lower Again

Yes, history has a way of repeating itself. Like how periods of high inflation are followed by recessions and bear markets time and time again. Or how periods of high stock valuations often lead to extended bear markets like 2000 to 2003…and yes that may be repeating now. Before you believe that the next bull market has emerged you may want to read this article to appreciate why the odds point to more downside ahead.

Read More Stories

More Occidental Petroleum Corporation (OXY) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All OXY News