Occidental Petroleum Corporation (OXY) — This is one of the largest oil and gas companies in the United States, and it also has global exploration and production facilities. Additionally, it is one of the largest U.S. marketers of chlorine and caustic soda through its OxyChem subsidiary.
The company reported Q1 earnings of 4 cents, excluding one-time charges, matching Capital IQ’s estimate. Analysts noted that management said its new ethylene cracker, coming in 2017, should increase distributable cash flow, supporting the recent 4% hike in the quarterly dividend to $0.75 per share.
In May, Capital IQ reduced its 2015 earnings estimate by 61 cents to $1.03 per share and lowered its 2016 estimate by 12 cents to $2.97. However, its analysts maintained their “buy” rating on OXY stock and raised their 12-month price target by $4 to $89.
Credit Suisse Equity Research also raised its price target, by $3 to $90, with its analysts saying OXY stock is a core holding. They also praise the company for having one of the strongest balance sheets among major E&P companies.
Technically, OXY stock formed a “W” bottom and recently has been the subject of very heavy accumulation without breaking out. This gives us an opportunity to buy shares on the cusp of what could be a major breakout.
For the breakout to occur, OXY stock must punch through resistance at the convergence of its May high at $82.02 and the 200-day moving average at just under $82. A break above resistance should result in a trade to $90 and a longer-term advance to over $100.
There has been much written recently about a potential rise in the price of crude oil, and many investors are searching for small-cap stocks that could benefit. But Occidental Petroleum is a premier, proven and well-managed energy giant with a yield of almost 4% and appreciation potential of 13% to 26%. Why look any further?