With oil prices stabilizing and Occidental Petroleum ($OXY) emerging as a leader in operational efficiency, the stage is set for long-term gains. Add Warren Buffett’s 28.8% stake, and you’ve got a story every investor should know. Is OXY the buy of 2025?
Introduction:
Occidental Petroleum (NYSE: OXY) combines value, growth, and innovation, making it an intriguing choice for long-term investors. With a 2024 stock price of $46.50, operational improvements, and strategic initiatives like carbon management, OXY stands out in the energy sector. Let’s explore why this Buffett-backed company might be an ideal fit for Dollar Cost Averaging (DCA) investors.

Key Points
1. Market Context
Current Stock Price: $46.50
52-Week Range: $42.00 - $66.00
Market Cap: $52.3 billion
Market sentiment remains cautiously optimistic as OXY navigates a year-to-date decline of -20.33%. However, Berkshire Hathaway’s ownership of 28.8% of OXY shares has provided confidence in the company’s long-term potential.
2. Financial Analysis
OXY’s valuation metrics and financial health signal potential undervaluation:
P/E Ratio: 12.7x, well below its 5-year average of 18.4x.
Price-to-Book Ratio: 1.43, reflecting a discount on assets.
Dividend Yield: 1.85%, with room for growth as debt reduces.
Q3 2024 Highlights:
Net Income: $964 million ($0.98 per share).
Operating Cash Flow: $3.8 billion, showing strong cash generation.
Debt Reduction: $4.0 billion in Q3, bringing the debt-to-equity ratio to 0.75.
3. Operational Performance
OXY’s operational improvements strengthen its position:
Production: 1.4 million barrels/day in Q3 2024, a company record.
Margins: Operating margins increased to 57.01% due to cost-efficient drilling.
4. Strategic Initiatives
CrownRock Acquisition: Boosting Permian Basin operations with successful integration and growth potential.
Carbon Management: Leadership in carbon capture technologies aligns with sustainability trends and opens new revenue streams.
5. Investment Thesis
Buffett’s Confidence:
Berkshire Hathaway’s 28.8% ownership signals belief in OXY’s undervaluation and long-term growth potential.
Undervaluation and Growth:
Trading below historical averages, OXY offers a potential value play. Operational efficiency and oil market stabilization could drive significant gains.
Dividend Growth:
With debt levels improving, OXY may increase dividends, enhancing shareholder returns.
6. Recommendations for DCA Strategy
Entry Points: Consider buying in the $45-$50 range, where technical support has been observed.
Long-Term Targets: A price recovery to $60-$70 appears plausible with operational success and market recovery.
DCA Approach: Spread purchases over time to mitigate volatility and average out the cost basis.
Conclusion/Big Picture: Occidental Petroleum offers a compelling mix of value, growth, and innovation, making it a strong candidate for long-term investment portfolios. With Buffett’s backing, operational improvements, and leadership in carbon management, OXY is well-positioned for 2025 and beyond.
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