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Warren Buffett has been showing strong bullishness over the integrated oil and gas company Occidental Petroleum (OXY - Free Report) . After shelling out around $4.5 billion last to last week to buy 91.2 million shares of Occidental Petroleum, he’s spent more than $1.5 billion last week to add another 27.1 million shares to Berkshire Hathaway’s stake, per a CNBC article.
That tallies to a total of 118.3 million shares that are worth almost $6.9 billion at Friday’s close of $57.95. As a result, OXY now secured the ninth spot on Berkshire’s list of biggest reported holdings of publicly-traded U.S. shares. And about 12% of Occidental’s outstanding shares is now in Berkshire’s kitty. Occidental shares are up nearly 90% over the last 12 months as oil prices have rallied.
Oil Price Has a Purely Upbeat Outlook in 2022
U.S producers expect to keep oil production flat this year as output cannot be ramped up instantly amid soaring crude prices, said Oxy CEO Vicki Hollub, as quoted on CNBC. Aging wells, labor shortages and higher raw materials prices because of supply chain issues have been posing threats. In the peak of the pandemic, most oil companies went for capex cuts due to lackluster demand.
Now, the sudden jump in demand thanks to the better COVID-19 management and geopolitical crisis in East Europe and Middle East may not enable companies to take the advantage fully by increasing production very fast. But yes, oil and gas explorers can definitely benefit from the rising crude prices.
Occidental Has a Bullish Outlook
OXY has a Zacks Rank #1 (Strong Buy) with upbeat industry and sector ranks. The stock has an upbeat VGM (Value-Growth-Momentum) score of B.
What Do Indicators Say About Occidental’ Valuations?
Going by valuation metrics, P/E (ttm) of OXY is 23.0 times versus the industry-average of 11.0 times. Forward P/E of OXY is 12.2 times versus the industry score of 6.6 times. Though these measures point to the higher valuation of Occidental than the industry, a higher P/E is always not a sign of worry. It shows investors’ confidence in a particular stock among the bunch.
Investors should note that return-on-equity of Occidental is 31.1%, higher than industry average of 15.2%. The estimated 3-5 year EPS growth of Occidental is now 33.7% versus 20.8% of the industry measure.
ETFs to Tap
To tap the optimism associated with Occidental Petroleum, investors can play Occidental-heavy ETFs as the basket approach reduces company-specific risks.
Invesco S&P 500 Equal Weight Energy ETF (RYE) – OXY has 6.50% Weight
Invesco Dynamic Energy Exploration & Production ETF (PXE - Free Report) – OXY has 6.42% Weight
First Trust Natural Gas ETF (FCG) –OXY has 5.95% Weight
John Hancock Multifactor Energy ETF (JHME) –OXY has 5.78% Weight
Engine No 1 Transform Climate ETF (NETZ - Free Report) – OXY has 5.60% Weight
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Buffett Bullish on Occidental: Time to Buy ETFs?
Warren Buffett has been showing strong bullishness over the integrated oil and gas company Occidental Petroleum (OXY - Free Report) . After shelling out around $4.5 billion last to last week to buy 91.2 million shares of Occidental Petroleum, he’s spent more than $1.5 billion last week to add another 27.1 million shares to Berkshire Hathaway’s stake, per a CNBC article.
That tallies to a total of 118.3 million shares that are worth almost $6.9 billion at Friday’s close of $57.95. As a result, OXY now secured the ninth spot on Berkshire’s list of biggest reported holdings of publicly-traded U.S. shares. And about 12% of Occidental’s outstanding shares is now in Berkshire’s kitty. Occidental shares are up nearly 90% over the last 12 months as oil prices have rallied.
Oil Price Has a Purely Upbeat Outlook in 2022
U.S producers expect to keep oil production flat this year as output cannot be ramped up instantly amid soaring crude prices, said Oxy CEO Vicki Hollub, as quoted on CNBC. Aging wells, labor shortages and higher raw materials prices because of supply chain issues have been posing threats. In the peak of the pandemic, most oil companies went for capex cuts due to lackluster demand.
Now, the sudden jump in demand thanks to the better COVID-19 management and geopolitical crisis in East Europe and Middle East may not enable companies to take the advantage fully by increasing production very fast. But yes, oil and gas explorers can definitely benefit from the rising crude prices.
Occidental Has a Bullish Outlook
OXY has a Zacks Rank #1 (Strong Buy) with upbeat industry and sector ranks. The stock has an upbeat VGM (Value-Growth-Momentum) score of B.
What Do Indicators Say About Occidental’ Valuations?
Going by valuation metrics, P/E (ttm) of OXY is 23.0 times versus the industry-average of 11.0 times. Forward P/E of OXY is 12.2 times versus the industry score of 6.6 times. Though these measures point to the higher valuation of Occidental than the industry, a higher P/E is always not a sign of worry. It shows investors’ confidence in a particular stock among the bunch.
Investors should note that return-on-equity of Occidental is 31.1%, higher than industry average of 15.2%. The estimated 3-5 year EPS growth of Occidental is now 33.7% versus 20.8% of the industry measure.
ETFs to Tap
To tap the optimism associated with Occidental Petroleum, investors can play Occidental-heavy ETFs as the basket approach reduces company-specific risks.
Invesco S&P 500 Equal Weight Energy ETF (RYE) – OXY has 6.50% Weight
Invesco Dynamic Energy Exploration & Production ETF (PXE - Free Report) – OXY has 6.42% Weight
First Trust Natural Gas ETF (FCG) –OXY has 5.95% Weight
John Hancock Multifactor Energy ETF (JHME) –OXY has 5.78% Weight
Engine No 1 Transform Climate ETF (NETZ - Free Report) – OXY has 5.60% Weight