Occidental Petroleum (OXY) Stock Could Heat Up to $85 in Coming Weeks
NEW YORK (TheStreet) -- Action Alerts PLUS holding Occidental Petroleum (OXY) - Get Report is shaping up nicely on the charts, and we see further gains. We think this is a good time and place to add to long positions and raise sell-stops.
OXY, chart above, made a double bottom in August and September and rallied strongly in October. There was a brief pullback at the end of October, and then prices quickly rallied to new highs for the move up. Prices are moving up today and look likely to close over the 200-day moving average. Traders could consider adding to existing long positions on OXY here.
Sell-stops on initial positions can be raised to your entry price, and stops on new longs can be placed at $71 for now. The next leg higher on OXY could carry to $85 in the weeks ahead.
TheStreet Ratings team rates OCCIDENTAL PETROLEUM CORP as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
We rate OCCIDENTAL PETROLEUM CORP (OXY) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. Among the primary strengths of the company is its solid financial position based on a variety of debt and liquidity measures that we have evaluated. At the same time, however, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- OXY's debt-to-equity ratio is very low at 0.28 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.05, which illustrates the ability to avoid short-term cash problems.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 37.2%. Since the same quarter one year prior, revenues fell by 36.5%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- OCCIDENTAL PETROLEUM CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, OCCIDENTAL PETROLEUM CORP swung to a loss, reporting -$0.27 versus $7.35 in the prior year. This year, the market expects an improvement in earnings ($0.33 versus -$0.27).
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, OCCIDENTAL PETROLEUM CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has significantly decreased to $1,020.00 million or 61.33% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- You can view the full analysis from the report here: OXY
Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.