Why Did Warren Buffett Buy This Oil Stock?

Published first at https://www.3minutebreakdowns.com Occidental Petroleum stock analysis. Ticker: $OXY Occidental Petroleum, at the current price has a market value of 55 billion. It’s got 5.3 billion of cash and investments and 20 billion of debt so the enterprise value is 78 billion. Meanwhile, the company has reported 28 billion of revenue over the last 12 months, 3.9 billion of net income and 4.1 billion of free cash flow. So the stock is now valued at 14 times earnings and 19 times free cash flow. Occidental has not had the best couple of years. Including dividends, the stock has returned negative 9% while the S&P 500 is up 34% and the XLE energy ETF is up 22% over the same period. But the performance of Occidental isn’t that surprising. Back in 2019, the company won a bidding war with Chevron for Anadarko Petroleum. But in winning that deal, Oxy ended up losing. The company ran up massive debt, issued preferred stock to Berkshire Hathaway at onerous terms — and then took a leveraged balance sheet headfirst into the pandemic. Oil prices were crushed and turned negative in April 2020. Occidental stock went below $10 a share, a decline of 90%. Later, as oil prices recovered, the stock gained over 500%. #investing #stockmarket #stocks #3mb