We came across a bullish thesis on Occidental Petroleum Corporation (OXY) on Substack by Oliver | MMMT Wealth. In this article, we will summarize the bulls’ thesis on OXY. Occidental Petroleum Corporation (OXY)’s share was trading at $49.97 as of Nov 15th. OXY’s trailing and forward P/E were 13.69 and 14.35 respectively according to Yahoo Finance.
An oil rig in the midst of extracting oil and natural gas from the earth, illuminated by the setting sun.
Occidental Petroleum (OXY), headquartered in Houston, is a leading international energy company with expertise in oil and gas exploration, production, and chemical manufacturing. It operates globally and is making significant investments in carbon capture and storage technologies, positioning itself as a pivotal player in the global energy transition. While OXY’s financial performance has faced headwinds due to low oil prices this year, the company’s robust fundamentals and strategic initiatives signal a strong long-term outlook.
Despite current challenges in the oil market, with WTI crude prices hovering below $70, OXY delivered its highest-ever operating cash flow of $1.5 billion last quarter, underscoring its resilience and ability to generate substantial value even in a low-price environment. The company’s EBITDA margin of nearly 50% highlights its operational efficiency, and with a next twelve months (NTM) EV/sales multiple of 2.9x, OXY remains attractively valued. While revenue growth of 1.72% reflects some stagnation, the underlying strength of its business model and cash flow generation offers a solid foundation.
OXY’s current valuation presents an opportunity, especially given broader market concerns. With recession odds for 2025 reaching 70% and weakening oil demand from China—prompting OPEC to revise its demand outlook from 580,000 to 450,000 barrels per day—the broader sentiment in the oil market remains cautious. However, this market pessimism, combined with OXY’s share price drop to $49, offers an excellent entry point for investors willing to dollar-cost average (DCA). It’s worth noting that Warren Buffett, a notable advocate for OXY, bought shares in the $60s, further reinforcing confidence in the company’s long-term potential.
OXY’s substantial investments in carbon capture technology align with global energy transition goals, setting it apart as a forward-thinking leader in the energy sector. While a near-term oil price recovery may be unlikely, OXY’s robust cash flow, disciplined management, and strategic positioning ensure it remains well-poised for future growth. For investors with a long-term horizon, OXY offers a compelling risk/reward proposition at current levels, making it an attractive opportunity amidst market volatility.
Occidental Petroleum Corporation (OXY) is not on our list of the 31 Most Popular Stocks Among Hedge Funds. As per our database, 62 hedge fund portfolios held OXY at the end of the second quarter which was 61 in the previous quarter. While we acknowledge the risk and potential of OXY as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than OXY but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.