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It goes without saying, that the oil/oil services sectors are preferred here. Look for oil to remain a major fuel for propulsion for at least three more decades, even with alternative energy source development. And with the aforementioned in mind, Occidental Petroleum (NYSE: OXY) is worth a review. Occidental Petroleum engages in oil/gas exploration and also makes basic chemicals, plastics, and petrochemicals. The company has proved reserves of 3 billion barrels of oil equivalent in three regions: U.S./North America, Middle East, and Latin America.
In general, analysts like Occidental's demonstrated business model, large geographically diverse reserve base, and reliable production methods. Another potential upside for revenue: Occidental's Monterey shale/Antelope silt initiative (1.1 million acres) could become a very significant asset, provided oil prices remain adequate. A modest financial risk profile and ample liquid assets adds to the favorable mix. The First Call F2009 / F2010 EPS estimates for OXY are $2.48 / $4.61.
The risks? A delay in the recoveries of the U.S. and global economies would weigh on OXY's F2009/ 2010 revenue and earnings. But that in no way blots-out this superior company's story, and a p/e of 9 creates a risk/return that's favorable for investors who can tolerate moderate risk.
Stock Analysis: Occidental Petroleum is a moderate-risk stock. Consider buying a 25% position in OXY now; then buy another 25% in three months, if U.S. and global economic conditions don't worsen substantially. Under any circumstance, don't buy more than 50% of your OXY position in the first half of 2009. Sell/Stop Loss if you were to buy shares in this company: $32.
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Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
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Reader Comments (Page 1 of 1)
4-27-2009 @ 1:55PM
mark said...
Isn't it curious that you hear NOTHING about OXY until we have a president in office who is BACKED BY OXY!!!! Obama went to Occidental College which was established by Armand Hammer of OXY as a school to groom future world leaders in the "Globalist" mindset. Sort of makes you go Hmmmmmmm...doesn't it?