Oil and gas stocks have been on a tear throughout this year, riding the wave of rising fuel prices. If oil sanctions in Europe continue, then these stocks may rise even further.
Occidental Petroleum (OXY) has been a clear beneficiary of these developments, and the company has been making the right moves to maximize shareholder value with its cash flow generation capacity. This, in turn, has caught the attention of the oracle of Omaha, Warren Buffett.
The TipRanks Insider trading tool brings to the fore major actions by Buffett, who now owns more than a 10% stake in the company. On July 1, Berkshire Hathaway (BRK.A) picked up nearly 9.89 million OXY shares at an average price of $58.90 per share.
Last month, Berkshire acquired about 10.34 million OXY shares in the range of $55.38 and $55.35 per share. In all, in the past month, Berkshire has snapped up OXY stock worth $1.15 billion. Moreover, since March, Buffett has accumulated OXY shares worth $9.88 billion, which is a sizable chunk of the company’s $55.64 billion market capitalization.
Most importantly, these purchases have been concurrent with a 95.6% rise in OXY shares so far in 2022. The TipRanks database further highlights that three of Buffett’s OXY transactions are already profitable, which gives him a 50% success rate in the stock already.
Analyst’s Take
Meanwhile, the Street is cautiously optimistic about the stock with a Moderate Buy consensus rating and an average price target of $74.53, which implies a further 23.31% potential upside for OXY shares.
Barclays analyst Jeanine Wai has reiterated a Buy rating on OXY while increasing the price target to $84 from $74. The analyst is favorable on names in the oil and exploration space.
Closing Note
Improving fundamentals, robust cash flow generation, and a focus on increasing investor value, with a price-to-earnings ratio of 9.2, a price-to-sales ratio of 2.01, and a price-to-free cash flow ratio of 6.60, have firmly put OXY on Buffett’s radar.
Moreover, Buffett’s moves are beginning to suggest that a potential acquisition of OXY may also be on the cards.
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