Occidental Petroleum Corp (OXY) May Be A Gem
By Mon, Mar 30, 2020
Occidental Petroleum Corporation (OXY) is trading near levels not seen since the early 2000’s. However, oil is trading at levels not seen since the 1990’s. So what makes this oil play a possible gem? First, understand that the current price is reflecting a worse case (bankruptcy) scenario. Bankruptcy is nearly priced in at this point if you look at the Occidental assets. Next, take into account that oil is this low because demand has taken a huge hit due to COVID-19 but also because there is an epic price war between Russia and Saudi Arabia.
The most important factor for many investors will be that Carl Icahn and Warren Buffet are heavily invested in Occidental Petroleum. It is very probable that they would be willing to commit more capital to get the company through this low oil price period.
In reality, a price of oil near $20/bbl is crushing Russia and Saudi Arabia. Both Putin and the Saudi royal family need to maintain control of their country. A low price will eventually drive these players to agree on cuts to drive the price of oil higher. In addition, COVID-19 will not last forever and strong demand will return.
The key for Occidental Petroleum is can it lasts for 3 or 6 months with oil in the $20/bbl range. With Warren Buffet, Carl Icahn in the mix and the stock priced near bankruptcy levels, it is worth a shot here at $11 or under in my humble opinion.
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About the Author
Chief Market Strategist Gareth Soloway has been an avid swing and day trader since his days at Binghamton University where he studied Economics. After college, Gareth quickly excelled as a financial adviser but his heart was always in swing and day trading. He had this long standing belief that he could help investors make more money by advising them on shorter term investments (holding a stock for days to weeks) than the buy and hold crowd who lost 50% of their money during every market collapse. “Why not profit during the bear markets just like the bull markets”, he said. While helping others gain financial independence during the day, he spent his nights studying charts and price action, developing a unique market trading system that put his profits on a rocket ship. Some nights he would barely sleep when he found a new technique that was proven, once back-tested.
