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TheStreet Open House

Occidental Petroleum's Stock Is on Sale -- But Not for Long

Stocks in this article: OXY

In short, the "parts" of OXY are likely worth a lot more than the current $63.8 billion market cap would indicate. Its operations, including vast energy production, comprehensive crude oil, natural gas and power marketing and sales in North American and international markets, are impressive.

Then you add in its valuable Occidental Chemical Corp. (OxyChem), which manufactures the building blocks for many everyday products, and you'll see the potential for its earnings, revenue and future share price.

The company is looking for a new CEO and president. As previously announced, Dr. Ray R. Irani, who continues to serve as executive chairman, will retire at the end of 2014. As of Dec. 20, Dr. Irani owned 7,657,622 shares of OXY, which at today's price is worth more than $605 million.

As of the end of 2012, the Vanguard Group and State Street owned nearly 8.7% of the outstanding shares of OXY, valued at over $5 billion. All these major holders and shareowners want to see the price of the stock move higher. Perhaps that's why current analysts' consensus one-year price target is still nearly $100.

You might remember what happened to ConocoPhillips (COP) less than two years ago when it was in similar circumstances. The majority shareholders and the board realized it was time to spin off its refining operations and, as the saying goes, "the rest is history." That spin-off, called Phillips66 (PSX), has been a great performing stock and hit its 52-week high March 28.

Might this be the "template" that the officers, board of directors and majority shareholders of Occidental Petroleum will eventually be mulling over? Once the new president and CEO is announced, the current corporate state of limbo will be ended. The news and earnings report on April 22 will be another major event that could be used to move the share price higher.

This is a company that can afford a share-buyback program and a dividend increase going forward. It has had a meaningful correction and is overdue for some good news. Do your own careful due diligence and accumulate the shares of OXY with knowledge and patience.

Disclosure: As of the time of publication, the author was long shares of OXY and COP.

Jim Cramer and Stephanie Link actively manage a real money portfolio for his charitable trust -- enjoy advance notice of every trade, full access to the portfolio, and deep coverage of the latest economic events and market movements.

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