Oil stock Occidental Petroleum, a favorite of Warren Buffett, is approaching a buy point from a cup-with-handle base. This market leader is Monday's pick for IBD 50 Growth Stocks To Watch.
OXY shares, which have gained 145% so far this year, are trading above their 50-day line and well above their 200-day moving average. The relative strength line is hitting new highs at the same time, highlighted by the blue dot in the daily MarketSmith chart.
Analysts predict Occidental will report a profit of $10.24 per share in 2022, up more than 300% from last year. Sales are expected to jump 43% to $37.3 billion over the same period.
The company reports Q3 results on Nov. 8, with consensus for earnings of $2.50 per share, according to FactSet. That would mark an impressive 185% surge year-over-year.
Berkshire Hathaway has increased its OXY stake to 26.8%, up from 20.2%, according to SEC filings. This comes after the Federal Energy Regulatory Commission granted Buffett's company approval on Aug. 19 to purchase up to 50% of outstanding stock in the energy giant.
Occidental Higher Despite Lower Crude Prices
Oil and gas stocks have consistently outperformed the market in 2022, and Houston-based Occidental Petroleum is one of the top S&P 500 performers.
It has benefited from higher fuel prices, triggered by inflation and Russia's invasion of Ukraine in February. However, crude oil has slumped since peaking on June, dropping below $85 per barrel on Monday.
Yet Oxy's primary business in oil, natural gas liquids and natural gas hasn't been dented, at least so far.
The heavyweight also has a petrochemicals segment, which has struggled as the housing sector slows. The Oxychem division makes PVC pipe, and is one of the three largest suppliers. This chlorinated hydrocarbon and plumbing product is made from natural gas and salt.
Tudor Pickering analyst Matt Portillo lowered his earnings estimates this month, warning that PVC pricing is in "absolute free fall."
Top-Ranked Oil Stock
OXY stock is ranked fifth in the Oil & Gas-International Exploration & Production subsector, which is No. 6 out of 197 industry groups, according to IBD Stock Checkup.
Other top-ranked companies in the group include APA ConocoPhillips and Hess.
Occidental holds a 98 RS Rating and a perfect 99 Composite Rating.
Follow Michael Molinski on Twitter @IMmolinski
