Trade of the Day: Occidental Petroleum Corporation (NYSE:OXY)

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Occidental Petroleum Corporation (NYSE:OXY) — In addition to being one of the largest U.S. sellers of chlorine and caustic soda, OXY is one of the largest oil and gas companies in the U.S., and it has other global operations.

Standard & Poor’s is impressed by OXY’s strong business profile, its modest financial risk profile and its diverse reserve base. On Saturday, S&P was quoted by FactSet as ranking OXY as one of 10 energy and materials companies with the lowest debt-to-equity ratios as of Sept. 30.

Earnings for 2015 are estimated at 33 cents, up from a loss of 18 cents in 2014. Analysts expect at least 87 cents per share earnings in 2016, but that assumes no recovery in the price of crude and other natural resources. Its Q3 2015 earnings showed production growth at 16%, with about 40% of the improvement coming from the Permian Basin and 50% from a natural gas project in the Middle East. The shares pay an annual dividend of $3, which translates to a yield of 4.4%.

S&P has a 4-STAR Buy on OXY with a 12-month target of $78.

OXY double-topped last year at about $105, and like most crude oil producers followed the price of oil as it fell from over $100 per barrel to under $30. Crude oil appears to have reversed, however, and so focusing on the “best of breed” producers could prove rewarding. Occidental Petroleum Corporation is in that category, as acknowledged by many energy analysts.

Technically, OXY experienced what appears to be a selling climax in January as high accumulation overpowered sellers, who liquidated early in the month. The stock double-bottomed and formed a bullish “V” formation. On Friday, Occidental pierced its 50-day moving average at $67.94, but the run halted at the top of a rectangle with support at $64 and resistance at $69. This narrow rectangle is part of a wider rectangle with resistance at $76, thus buying OXY at $67 with a trading target at $76 within four months could return a trading profit of more than 13% plus dividends.

OXY Buy
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Article printed from InvestorPlace Media, https://investorplace.com/2016/02/trade-of-the-day-occidental-petroleum-corporation-nyseoxy/.

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