back to blog homepage

Occidental Petroleum On Sale

How often can you purchase a company that has an earnings growth rate of 28%, a sales growth rate of 21%, a net margin of 29%, a return on equity of 25%, and a long term debt ratio of just 7%, for a forward P/E of 7? You can today with Occidental Petroleum – I just bought 2,000 shares for our clients at $72.83, and have an 18-month target price on them of $121.50 (average earnings estimate of $11.05 per share X current year P/E ratio of 11).

Add to this that the company is buying back 20 million shares of its own stock (because it believes it is too cheap) and that it is extending its reserves by buying into the Canadian Oil Sands, and you have a great opportunity here.

It is ridiculous how cheap this company is and its all because of the hedge funds’ shift from energy, ag, and metals companies into financials. This is one of those rare opportunities that you get to buy companies with high earnings potential for dirt cheap valuations – and make serious money once fundamentals take over for the herd mentality of the hedgies not wanting to miss the bottom of the financial company bear market.

Can it get cheaper? Sure it can – and if it does, we’ll just buy more.

mb